U.S. Treasury Say Yuan MUST Shift

    May 5, 2005

Speculation on the Chinese currency isn’t just limited to financial markets. Many are speculating how and when China might choose to shift the rate on the yuan. A member of the U.S. Treasury said China should loosen the peg immediately

In as much as markets are speculating on the yuan right now, financial experts are speculating on when exactly China might make the shift.

Experts told Bloomberg’s:

Goldman Sachs expects China to move away from the peg of about 8.3 per dollar “at any time.” Jim O’Neill, the firm’s head of global economics research in London, said late yesterday Jin’s comments didn’t change his outlook. He said the change may come May 18, when China is scheduled to expand foreign-exchange trading in Shanghai to 12 currencies from four.

“Technically, tactically and strategically they are ready,” said Frank Gong, chief China economist at JPMorgan Chase & Co. in Hong Kong, who predicted six days ago a yuan revaluation may occur this week. He said this week still “is the first window of opportunity.

It’s still anyone’s guess however since there’s almost too much speculation going on. Speculators are poised to pounce when China cuts it loose and that makes some people, especially the Chinese a little jumpy.

Finance Minister Jin Renqing of China said in Istabul during a meeting with Asian finance ministers, “When there’s too much speculation, this makes it difficult to implement reform of the exchange-rate regime,”

John Stith is a staff writer for WebProNews covering technology and business.