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People's Daily Online>>China Business

No need for panic over RMB fluctuations (2)

(People's Daily)

09:29, December 11, 2011

More two-way fluctuations to come

Sun Laixiang, a professor from the Department of Financial and Management Studies of the University of London, said that, in addition to the European debt crisis, there are also other reasons for the current decline in the RMB exchange rate. For example, China is experiencing a new round of economic adjustments and has also adopted tight monetary policies to regulate and control its real estate market, and that has lowered the outside world's short-term confidence in the RMB exchange rate. But in the long run, the Chinese market is still very powerful and attractive, and the RMB will also stay at a relatively steady level.

Alexander Klingberg, a researcher and senior consultant from the renowned Austrian think tank Austria Institute of International Studies, believes that the short-term buyers of the market have targeted China. He said signs are showing that China's economic growth is slowing down, and some hot money is flowing out of China. Meanwhile, since the world's demand for the U.S. dollar is increasing, the RMB may see a decline this time after staying at a high level for several months

The recent fluctuations indicate that two-way fluctuations probably will be more common in the future, and even violent fluctuations may appear in the future. Xie Dongming, an economic analyst from the Overseas-Chinese Banking Corporation of Singapore, said that the change from one-way appreciation to two-way fluctuation means a new era for RMB transactions has started. Markets will strengthen their predictions about two-way fluctuations, and the scale of RMB transactions will also change accordingly.

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wende at 2011-12-1271.251.41.*
this should show to US that RMB does reflect market condition and not manipulated by China"s central bank

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