As China’s export engine sputters, it is avoiding the seemingly simple fix of letting its managed currency drift lower to improve competitiveness, constrained by the threat of faster capital withdrawal as its economy slows.
The yuan has struck record highs this year against the euro , the Indonesian rupiah, and the Australian dollar, a surge that coincided with a shock 15 percent fall in Chinese exports in March.
According to Goldman Sachs, its yuan trade-weighted index has jumped 13 percent since June last year, and the currency’s strength is a key reason for China’s disappointing export sales.
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