The head of the International Monetary Fund this week urged Chinese authorities to address economic imbalances, adding to criticism that Beijing weakens its currency to benefit its exporters.
The EU Chamber of Commerce noted recently that the renminbi had fallen to its lowest in a decade against the euro, despite trade patterns that should have helped it appreciate, while Goldman Sachs said in a note to clients that the currency was around 25% undervalued and its strengthening was among the bank’s “highest conviction views.”
Even Chinese economists — typically loath to contradict Beijing — have argued that the renminbi needs to appreciate. “If this does not happen,” a Chatham House expert warned, “then protectionist sentiment in the West is likely to build.”