IMF Says Chinese Yuan No Longer Undervalued

For years, China has been criticized for keeping its currency from strengthening too much against the dollar. But those days may be over — the International Monetary Fund has declared that the yuan is “no longer undervalued.”

“Appreciation over the past year has brought the exchange rate to a level that is no longer undervalued,” according to an IMF statement.

China’s yuan, also called the renminbi, has risen about 0.5% against the U.S. dollar in the last year.
The IMF’s take on this marks a significant shift, and comes as Beijing continues to promote the yuan as a global reserve currency for central banks — an alternative to the dollar.

China has historically kept tight control of its currency — favorable exchange rates have helped boost exports and manufacturing over time. But China has continued to draw ire from the U.S. government for keeping it artificially low.

China continues to set its daily exchange rate, allowing the yuan to fluctuate within a fixed range. Beijing has begun to loosen its grip — last year, the central bank doubled the permitted trading range for the yuan.

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza