Photo: AP Images
The US Treasury’s Office of International Affairs released its Report to Congress on International Economic and Exchange Rate Policies, which affirmed that China is continuing to let the value of the renminbi rise.As Reuters reports, the U.S. Treasury neglected to attach the label of ‘currency manipulator’ to China.
China, often disparaged during the Presidential campaign season for maintaining an artificially low currency, has allowed the renminbi to gradually appreciate. This report gives us an indication of China’s recent appetite for currency appreciation.
The report notes:
From June 2010, when China moved the renminbi (RMB) off its peg against the dollar, through early November 2012, the RMB has appreciated by 9.3 per cent against the dollar and 12.6 per cent on a real, inflation-adjusted basis. China’s trade and current account surpluses both have fallen to 2.6 per cent of GDP from a peak of 8.8 and 10.1 per cent of GDP, respectively. Because of these changes, estimates of the remaining degree of undervaluation have narrowed over the past two and a half years.
David Wessel tweeted that this latest development marks the highest level in the renminbi against the dollar since 1993.
Check out this graph which illustrates the dollar’s decline relative to the renminbi since 2010:
Photo: Yahoo Finance
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