Billionaire investor George Soros, at the World Economic Forum in Davos, Switzerland, urged China to let its currency to appreciate.
“The case for revaluing the renminbi/yuan (CNY) is getting stronger and stronger.”
On a panel in Davos, U.S. Congressman Barney Frank said, regarding the exchange rate of the Chinese currency, that officials in Beijing “have been excessively self-interested. I think they’ve been very uncooperative.”
From his part in response, People’s Bank of China (PBOC) Deputy Governor Zhu Min stated that it is important to have renminbi/yuan stability.
“It’s good for China, it’s also good for the world.”
After Zhu’s comments, the yuan futures that are traded in Hong Kong fell to their lowest level so far this year.
Last week, Goldman Sachs Chief Economist Jim O’Neill said in an interview the Chinese government may allow their currency to have “a bigger one-off move than people talk about, at least 5 percent, maybe more … They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players.”
The topic is set to be discussed when Group of Seven finance ministers and central bankers meet Feb. 5-6 in Iqaluit, Canada.
Meanwhile, the Federal Reserve held steady on monetary policy but, for the first time in a year, the vote was not unanimous.
The dissenting voter was Kansas City Fed president Thomas Hoenig.
It could well be that Hoenig's vote suggests that higher interest rates may come sooner than later and, as a result, has helped win support for the U.S. dollar, which has made its way to a 0.4 percent gain against competing currencies.
The FOMC statement announced no new quantitative easing measures announced and repeated that “economic activity has continued to strengthen and that the deterioration in the labor market is abating.”
Additionally, “household spending is expanding at a moderate rate” and “financial market conditions remain supportive of economic growth.”
However, “the pace of economic recovery is likely to be moderate for a time.”
More importantly, the statement repeated “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
© Moneynews. All rights reserved.