The heads of the International Monetary Fund (IMF) are split on whether the Chinese yuan is undervalued. Thus, the organization transferred the differences between U.S. and China on monetary policy in the Asian country. Some board members say the organization that claims that China’s exchange rate is undervalued, based on “vague forecasts for the current account surplus country, it is clear from the statement distributed after the last meeting of the organization. The Chinese yuan rose is less than the rate against the dollar for the last month, although U.S. push for faster appreciation of yuan. On 19 June the authorities in China announced that they no longer practical policy fixed exchange rate of yuan to the dollar and that will be pursued more flexibility. “Directors welcomed the decision to return to the regime of managed floating exchange rate,” it said in the opinion of the meeting. “This decision will increase the flexibility of the central bank to tighten monetary policy,” said the heads of the IMF. Today, the Chinese yuan was at 6.7792 yuan to the dollar after a period of two years – from July 2008 to June 2010 was held at 6.83 yuan to the dollar. “Many directors maintain that over time a strong yuan will help the transition from investment to exports and private consumption as the main driver of growth, it is clear from the opinion.
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The U.S. market analysts predict a new shock to the markets. After Obama’s intentions to repair the banking system radically, according to them, now it is time for China to throw bombs in markets. This time, however, no room for panic, because it is forecast that China will take once an increase in the value of its currency. This should give a strong impetus to the markets, as can be extremely useful for most economies in the world. At this stage, however, nothing is certain, so do not make the mistake to trust fully the hearing, Brian Kelly warns of Kanundrum. “Many foreign exchange traders talking about this for quite some time, but so far nothing like that has happened,” he said. Kelly himself believes that it is very likely to happen. “There are political and economic will in China to do so, he believes. “From an economic standpoint, if inflation continues to grow, they will be most useful to let the yuan to rise and to suppress growth in prices. Purely political, such a decision would simply make the situation of China to the world a favor, “he said.
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