How long will the renminbi stay on the weak side as the China-US rate paths diverge? Has the currency been undervalued? Fund managers have different views.
China's weakening trade surplus is driving down the value of the renminbi, which is exactly what you would expect from a market-based currency, say government officials.
The People's Bank of China has increased renminbi circulation by 80% in the past five years, but demand for wallet-ready bills grew by 20% each year, the bank said.
But Chinese exporters will find it increasingly difficult to maintain the growth even without a stronger yuan, because the country’s manufacturing workforce is shrinking and getting more expensive.
Developing a stronger culture of domestic consumption is crucial to AsiaÆs growth, Standard Chartered's Asia CEO, Jaspal Bindra, argues in this contributed view point article.
Reducing China's exposure to foreign currencies by increasing the use of the renminbi could limit the risks for Chinese traders, investors, and financial institutions, but major hurdles lie ahead.