News / Asia

Chinese Yuan Dips After Geithner Testimony

China's currency weakened slightly, despite tough talk by U.S. officials on Beijing's foreign exchange policy. Some financial analysts expect a round of market intervention by Asian central banks to keep their currencies from rising.

The Chinese central bank set a new high exchange rate for the yuan against the dollar Friday, a day after U.S. lawmakers and Treasury Secretary Timothy Geithner sharpened criticism of its foreign exchange policy.

Even so, the yuan weakened slightly against the dollar.

The yuan is about 1 percent stronger than it was in June, when Beijing eased its strict peg to the dollar. Most of the gain came this month, ahead of U.S. congressional hearings on China's exchange rate policy.

Thio Chin Loo is an Asian currency strategist at BNP Paribas in Singapore. Despite the slide Friday, Thio thinks Beijing will let the yuan strengthen further.

"It might slow from the pace we had this week but directionally, yes, it's still heading up," said Thio.

But Geithner says this managed appreciation is too slow. China only allows the yuan to move half a percent daily.

"China is running a set of policies designed to keep the currency undervalued. They are moving to let it rise but not that very quickly. Not very much either. The impact of that has the effect of providing a relative disadvantage to products that compete with products the Chinese make," he said.

Some U.S. lawmakers call for punitive measures against China, the United States' second largest trading partner, such as higher tariffs on its exports. Many economists and business people around the world say the yuan is undervalued by as much as 30 percent.

With elections in November, political analysts say there is pressure on Congress for a tougher stance partly to allay concerns about the weak U.S. economy. Artificially cheap Chinese exports have been blamed for record U.S. trade deficits, which have allowed Beijing to accumulate hundreds of billions of U.S. dollars in reserves.

But China resists pressure to let the yuan appreciate.

Foreign Ministry spokeswoman Jiang Yu said Thursday the yuan's exchange rate is not the answer to U.S. trade deficits and unemployment.

Here in Asia, the yuan's exchange rate causes problems for China's export competitors. Strong capital inflows, including Chinese investments, are pushing up the value of many Asian currencies.

On Wednesday, the Japanese central bank bought dollars to weaken the yen, which had reached 15-year highs against the dollar. The move came after China aggressively bought Japanese government bonds, helping lift the yen's value.

China also has bought record amounts of South Korean government debt, pushing the won up 3 percent against the dollar this month.

Mark Walton is a senior economist at the investment bank CLSA Asia Pacific Markets in Hong Kong. He says as Asia braces for a slower global economy next year, central banks, including those in Taiwan and South Korea, will try to keep currencies from strengthening.

"They would be as active in the currency market as they have ever been," he said.

If they do, China analyst Gordon Chang says it would compound the challenge for the U.S.

"What I'm really afraid is that because of China's fixing the value of their currency, the Japanese are doing the same, other Asian nations are going to do the same and it's not inconceivable that we could see the end of the free-floating exchange rates. The next trade war could be over currencies," said Chang.

Despite Tokyo's intervention this week, the yen held steady Friday around 85.80 to the dollar. The government has indicated it might buy dollars again if the yen continues to strengthen.

Japanese Prime Minister Naoto Kan and President Obama are expected to discuss the yen when they meet next week (September 23) in New York.

You May Like

Islamic State Survivor: A Yazidi Girl's Tale

Sarah Said Haydar, captured a year ago while fleeing Islamic State onslaught in northern Iraq, was so traumatized by militants, she sought to end her own life More

EU, US Applaud Kosovo Law on Special Court

Joint statement says lawmakers' decision to address allegations of war crimes 'demonstrated their commitment to the rule of law and to honor international agreements' More

ASEAN Ministers to Push for S. China Sea Agreements

According to documents obtained by VOA Khmer, ministers will stand up for 'freedom of navigation, unimpeded lawful maritime commerce, trade and over flight' More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Cambodia Makes Progress Curbing Bear Tradei
X
Robert Carmichael
August 04, 2015 3:07 PM
Cambodia’s wild bears are under unprecedented pressure. Their native forests are being cut down at record rates, and China's huge demand for traditional medicine has made them targets. But experts say Cambodia's conservation efforts are setting an example that has put it well ahead of its neighbors in protecting bears. Robert Carmichael reports for VOA from Phnom Penh.
Video

Video Cambodia Makes Progress Curbing Bear Trade

Cambodia’s wild bears are under unprecedented pressure. Their native forests are being cut down at record rates, and China's huge demand for traditional medicine has made them targets. But experts say Cambodia's conservation efforts are setting an example that has put it well ahead of its neighbors in protecting bears. Robert Carmichael reports for VOA from Phnom Penh.
Video

Video Growing Number of E. Jerusalem Palestinians Seek Israeli Citizenship

Most Palestinians living in East Jerusalem have long rejected the option of full Israeli citizenship, seeing it as a betrayal to their political cause - the formation of a Palestinian state with East Jerusalem as its capital. But as that dream remains elusive, more and more Palestinians are applying for Israeli citizenship. Zlatica Hoke reports the decision is hard for many Palestinians who say they have to be pragmatic about it.
Video

Video With No Money, More Students, African Universities Struggle

Academics from around the African continent converged in Johannesburg last week for the African Universities Summit, a chance to tackle some of the major issues facing higher education in Africa today. VOA's Anita Powell reports from Johannesburg.
Video

Video Iraqi Yazidis Fear Death of Their Community

A year ago on August 3, Islamic State militants stormed the homelands of Iraq’s Yazidi minority, killing hundreds of men and enslaving thousands of women. The scenes of desperate Yazidi families crowding on the top of Sinjar mountain without food or water spurred Kurdish fighters into action, an emergency airlift and the start of the U.S. airstrike campaign against the Islamic State Sunni extremists. VOA's Sharon Benh reports from northern Iraq.
Video

Video Bangkok Warned It Soon Could Be Submerged

Italy's Venice and America's New Orleans are not the only cities gradually submerging. The nearly ten million residents of the Bangkok urban area now must confront warnings the city could become uninhabitable in a few decades. VOA Correspondent Steve Herman reports from the Thai capital.
Video

Video Inclusive Gym Gets People With Disabilities in Fitness Spirit

Individuals with special needs are 58 percent more likely to be obese than the general population. According to the U.S. Centers for Disease Control, they also have an increased likelihood of anxiety, depression and social isolation. But a sports club outside Washington wants to make a difference in these people's lives. With Carol Pearson narrating, VOA's June Soh reports.
Video

Video Wisconsin's Voter ID Law Still Mired In Controversy

Voter ID laws have sparked controversy across the US. More than 30 states enacted laws requiring citizens to show identification before they vote. Against fierce opposition, the state of Wisconsin recently enacted one the most restrictive voter ID laws in country. As Jeff Swicord reports, no one can predict its impact as the 2016 election nears.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Ebola Vaccine Hailed as Highly Effective

At last, there's a way to end the suffering from the Ebola epidemic that has ravaged West Africa for more than a year. Researchers say the vaccine is so effective, there may never be a major outbreak of Ebola again. VOA's Carol Pearson reports.
Video

Video Special Olympics Show Competitors' Skill, Determination

Special Olympics competitions will wrap up Saturday in Los Angeles, and the closing ceremony for athletes with intellectual disabilities will be held Sunday night. In a week of competition, athletes have shown what they can do through skill and determination. VOA's Mike O'Sullivan reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Shooter’s Grill: Serving Food with a Touch of the Second Amendment

Shooter's Grill, a restaurant in Rifle, Colorado, attracts visitors from all over the world as well as local patrons. The reason? Waitresses openly carry loaded firearms as they serve food, and customers are welcome to carry them, too. VOA's Enming Liu and Lin Yang paid a visit to Shooter's Grill, and heard different opinions about this unique establishment.
Video

Video Despite Controversy, Business Owner Continues Sale of Confederate Flags

At Cooter’s, a store in rural Sperryville, Virginia, about 120 kilometers west of Washington, D.C., Confederate flags are flying off the shelves. The red, white and blue battle flag, with 13 white stars representing the Confederate states, was carried by southern forces during the U.S. Civil War in the 1860s. The South had seceded from the Union over several key issues of disagreement, including slavery. VOA’s Deborah Block has the story.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.

VOA Blogs