China is carrying out stress tests on labor-intensive industries to gauge the effect a stronger yuan would have on earnings, reports Bloomberg (itself reporting local paper the 21st Century Business Herald). Consequent speculation on the yuan has pushed forward prices up.
The yuan’s value has been kept at about 6.83 per dollar since July 2008, following a 21 per cent advance over three years, as policymakers intervened to help exporters weather a global recession.
The currency may appreciate as soon as the second quarter and end 2010 with a 2 per cent gain, Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai, told Bloomberg.
Such a move would delight Americans, and, indeed, many economists, who believe that global imbalances can only be addressed by a strengthened yuan.
