China’s undervalued currency will eventually appreciate. The timing and amount of this rise are of importance to regional exporters as well as to investors in China, writes Fitzhugh J. Deal in Shanghai.
Analysts and trading partners alike assert that China’s currency, the renminbi yuan, has long been seriously undervalued, giving China’s exporters an unfair advantage in trade. While it is tempting to downplay the importance of the renminbi exchange rate given the continued inconvertibility of China’s capital account, the question is of importance to other exporters in the region as well as to the continued development of China’s capital markets.
