What to do with the RMB now that China’s foreign currency reserves are reported (by the Houston Chronicle quoting the Financial News) to have reached US$925 billion as of the end of May, up from US$875.1 billion at the end of March. The resulting pressure on the Chinese currency to appreciate may lead Beijing to widen the daily trading limit and allow it to strengthen, according to a report in The Age.
Such a move would reduce currency speculation, help cool the economy, and make exports relatively less competitive – music to the ears of protectionist campaigners in the US and EU.
See news sources:
China may ease the shackles on currency
The Age – Melbourne,Victoria,Australia
THE yuan rose the most in almost two weeks after the China Securities Journal said the Government might soon widen the daily trading limit. …
Report: China’s Currency Reserves Grow
Houston Chronicle – United States
BEIJING — China’s foreign currency reserves, already the world’s largest, grew to US$925 billion (euro725 billion) at the end of May, a financial newspaper …