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To bet on appreciation of Chinese currency Renminbi is likely to
pay high prices, warned a top forex official on Sunday in Beijing.
Guo Shuqing, director-general of the State Administration of
Foreign Exchange (SAFE) and member of the National Committee of the
Chinese People's Political Consultative Conference, said that the
RMB appreciation anticipation is expected to ease this year as
economies of the United States and other developed countries are
showing clear signs of recovery, which would result in backflow of
the US dollar and ease China's excessive supply of foreign
exchange.
It is widely believed that the US Federal Reserve is likely to
raise interest rates in the middle of this year and that will
narrow the gap with RMB in interest rates, he said.
China has already recorded deficit in its foreign trade so far
this year, the director said. Although it is hard to predict for
the whole year, China's trade surplus is likely to be reduced.
This, plus the rebound of inflation and the worrisome assets
bubbles, would thwart the RMB appreciation anticipation.
He reminded domestic enterprises and residents of the risks
involved in the fluctuation of exchange rates and told them to be
on the alert against risks in order to prevent unnecessary
losses.
"Betting on RMB appreciation is likely to pay enormous prices,"
he warned.
(Xinhua News Agency March 8, 2004)
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