Slow and Steady

by Holly S.

Although the Chinese government is insisting that outside sources will not influence how they evaluate the worth of the yuan many signs point to a rise in the yuan, although a slow and controlled rise.

Singapore revalued its currency on Wednesday. It has experienced strong growth since the end of the recession and allowed its dollar to rise to counter fears of inflation. Other Asian currencies including the Malaysian Ringgit and the Korean Won rose after Singapore’s move. Singapore’s decision to allow its currency to strengthen is likely a sign that the Singapore’s central bank believes that China will strengthen the yuan shortly.

The yuan is currently pegged to the dollar and it thought be 25%-45% undervalued. If China lets the yuan off the peg it will probably rise slowly, some analysts believe as little as 5% percent in the first year.

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