Yuan Strength Seen as Message to Obama as Talks Loom: Currencies – Bloomberg.
China is using the yuan to make the case that it’s a responsible economic powerhouse before President Xi Jinping meets Barack Obama in Beijing tomorrow.
The People’s Bank of China yesterday raised its yuan reference rate by the most since 2010. In doing so, strategists say it’s distancing itself from the stimulus policies ofJapan and the euro region, which have resulted in the kind of currency weakness that’s attracted the ire of U.S. officials concerned about unfair trading practices.
“With the depreciation in the yen, Xi wants China to be providing some stability in an environment of general weakness,” Tim Condon, the head of Asian research at ING Groep NV in Singapore, said yesterday by phone. “It’s more about stability than strengthening.”
Whether or not a stronger currency is the goal, a higher exchange rate may help policy makers promote the yuan as a currency of global trade to rival the dollar and euro. With Xi due to meet the U.S. president at the Asia-Pacific Economic Cooperation forum, an appreciating yuan may also help assuage American criticism that China derives an unfair economic advantage from an artificially weak currency.
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