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China should let yuan float to avoid slump - ex-PBOC adviser

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 28, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - Yu Yongding, a former adviser to the People’s Bank of China (PBOC) wrote in a note on Wednesday, published today by Bloomberg, that the Chinese central bank should stop fx interventions and allow the yuan to float freely, allowing market forces to determine the value of the exchange rate within the range.

    Key Quotes:

    “China is still running a large current-account surplus and a long-term capital-account surplus, and it has not fully liberalized its capital account.”

    “So the chances are good that the yuan would not fall too far or for too long.”

    In the meantime, the government should implement existing capital controls “much more strictly” to limit outflows.
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