Roubini: China Will Let The Yuan Strengthen In Q2

Nouriel Roubini has weighed in on one of the hottest questions of the moment: when will China let its yuan strengthen?

Dr. Doom says Q2, though the appreciation will be marginal.


China will limit the yuan’s appreciation to 4 per cent over the next 12 months because of a “super cautious” outlook on the global economy, said New York University Professor Nouriel Roubini.

The central bank may end a 20-month peg to the dollar as soon as the second quarter, allowing a 2 per cent one-step gain, and then let the currency strengthen another 1 per cent to 2 per cent in 12 months, Roubini said in an interview in New York. The yuan rose 21 per cent between July 2005 and July 2008, when the government halted its advance to protect exports.

Roubini’s forecast is less aggressive than the median estimate in a Bloomberg survey of 20 analysts for the yuan to rise 5 per cent to 6.50 per dollar by March 31, 2011.

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