ID :
129080
Tue, 06/22/2010 - 11:21
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Shortlink :
http://m.oananews.org//node/129080
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China’s decision to make yuan flexible to help boost global economic recovery
BANGKOK, June 22 (TNA) – China’s decision to make the yuan’s exchange rate more flexible will help boost the global economic recovery, according to the Bank of Thailand (BoT).
BoT Deputy Governor Bandid Nijathaworn said Beijing’s move should be seen as justifiable because the Chinese economy is now very strong and expanding steadily with the current account balance enjoying a
substantial surplus.
The decision to increase the flexibility of the yuan serves as an adjustment of the economic policy towards the economic fundamentals of other countries. It will help ease inflationary pressure in China since the inflation rate there is now accelerating considerably.
“Adopting the policy to make the yuan’s exchange rate more flexible is tantamount to giving the currency an opportunity to strengthen, which will help boost global economic recovery. Strengthening of yuan will make other currencies in the region including Thai baht appreciate accordingly,” he said.
Should all currencies in the region strengthen simultaneously, concerns over the pros and cons of the baht's appreciation or depreciation against other currencies could be ruled out.
It meant, he pointed out, Thailand would not lose its export competitiveness in terms of currency value because currencies of the country’s rivals had also appreciated in the same direction as the baht.
In contrast, entrepreneurs in other Asian countries including Thailand, and major industrialised countries will benefit from the yuan's flexibility because they could export more goods to China, helping ease the trade imbalance with China in the long run.
Mr Bandid said China had enjoyed the hefty economic growth and had much more room to import goods from other countries. China is considered one of Thailand’s key export destinations as its exports to China represent around 11 per cent of the total shipments.
Since early this year, he said, the baht had appreciated by around 3.1 per cent, which is close to that of other countries in the region. It showed the Thai currency had changed based on fundamentals and the market mechanism. (TNA)
BoT Deputy Governor Bandid Nijathaworn said Beijing’s move should be seen as justifiable because the Chinese economy is now very strong and expanding steadily with the current account balance enjoying a
substantial surplus.
The decision to increase the flexibility of the yuan serves as an adjustment of the economic policy towards the economic fundamentals of other countries. It will help ease inflationary pressure in China since the inflation rate there is now accelerating considerably.
“Adopting the policy to make the yuan’s exchange rate more flexible is tantamount to giving the currency an opportunity to strengthen, which will help boost global economic recovery. Strengthening of yuan will make other currencies in the region including Thai baht appreciate accordingly,” he said.
Should all currencies in the region strengthen simultaneously, concerns over the pros and cons of the baht's appreciation or depreciation against other currencies could be ruled out.
It meant, he pointed out, Thailand would not lose its export competitiveness in terms of currency value because currencies of the country’s rivals had also appreciated in the same direction as the baht.
In contrast, entrepreneurs in other Asian countries including Thailand, and major industrialised countries will benefit from the yuan's flexibility because they could export more goods to China, helping ease the trade imbalance with China in the long run.
Mr Bandid said China had enjoyed the hefty economic growth and had much more room to import goods from other countries. China is considered one of Thailand’s key export destinations as its exports to China represent around 11 per cent of the total shipments.
Since early this year, he said, the baht had appreciated by around 3.1 per cent, which is close to that of other countries in the region. It showed the Thai currency had changed based on fundamentals and the market mechanism. (TNA)
