2012-05-31

Renminbi continues to slide

The market continues to push the renminbi lower and the central bank is chasing it.

Here's the WSJ take: Yuan Falls On Growth Concerns
"It seems that the PBOC is still only partly reflecting the dollar's strength in global markets, allowing only slow depreciation of the yuan against the dollar, perhaps due to recent U.S. calls for more yuan appreciation... However, the central bank may become bolder in weakening the yuan against the dollar if the domestic economy slows further," said Credit Agricole in a research note Wednesday.

A Shanghai-based trader with a foreign bank said he saw strong dollar demand in the onshore market as investors worried about global and domestic economic growth sought safety in less-risky assets.
Republican presidential candidate Romney has complained about the yuan:
US political leaders, including Republican presidential candidate Mitt Romney, have accused China of manipulating its currency, a move they say makes American exports less competitive. Romney had said that if he is elected he would identify China as a currency manipulator on his first day in office.
At some point, politics gives way to economics.

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