China_and_the_yuan

China_and_the_yuan - China and the yuan: What's at stake By...

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China and the yuan: What's at stake By Chris Isidore, senior writerApril 10, 2010: 11:35 AM ET NEW YORK (CNNMoney.com) -- Chinese and U.S. officials are reportedly close to a deal on boosting the value of China's currency, the yuan -- the first step to making U.S.-made goods more competitive versus Chinese exports. U.S. Treasury Secretary Timothy Geithner was in China for a surprise meeting this week, and Chinese President Hu Jintao is due in Washington next week. "It's basically seems like it's a done deal," said foreign exchange expert Ashraf Laidi, chief market strategist for CMC Markets. The agreement is widely expected to result in an immediate 2% to 3% rise in the yuan -- a fairly modest step. What could make the agreement significant, however, is if China agrees to future increases as the currency moves toward being freely traded for the first time. Laidi thinks the yuan is undervalued by 15% to 20% undervalued, and said a rise of 6% to 7% a year will be needed to start to make a significant dent in the undervaluation. That's possible, Laidi said, given that China allowed the yuan to rise more than 15% from mid-
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China_and_the_yuan - China and the yuan: What's at stake By...

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