China economist: yuan likely to rise 5-7pct vs dollar this year – report

China’s yuan will likely appreciate 5 percent-7 percent against the US dollar this year, an economist wrote in a commentary piece in the state-run Shanghai Securities News on Tuesday.

In the face of persistent imported inflationary pressure, a moderate increase in the pace of the yuan’s appreciation would help curb price rises and create more room for an interest rate hike, Zhang Ming, an economist at the government-backed Chinese Academy of Social Sciences, wrote in the piece.

The yuan has risen 4 percent against the US unit since June, when China effectively ended its currency’s two-year-long peg to the dollar.

Zhang said he expects China to introduce two or three 25-basis-point interest rate hikes this year, as well three or four 50-basis-point increases in banks’ reserve requirement ratio.

He also said the country should strengthen its capital account controls to avoid short-term capital inflows spurred by higher interest rates.

China has raised banks’ reserve requirement ratio eight times since the beginning of last year, and increased interest rates three times since October to tame inflation.

http://online.wsj.com/article/BT-CO-20110307-714707.html

 

Category: China