A July 10 US Treasury Department report alleged that the yuan was undervalued. But financial experts say the yuan has risen voluminously in the past 16 years, says an article in People's Daily. Excerpts:
Though Bank of International Settlements' effective exchange rate index in June showed the yuan was 118.8, down 0.98 percent from May, it was the result of the rise of the euro, yen and the pound. This shows the two-directional trend of the yuan's exchange rate, which has kept pace with changes in the global market.
The yuan has experienced ups and downs in the past five years, reaching its highest point, 126.06, in February last year, when it was pegged to the US dollar. In June 2010, the yuan fell by 5.76 percent compared to the February 2009 figure. But the dollar fell during that period, too, by 5.24 percent.
That's why an analysis of the currency rate should always consider the historical process, instead of being made in isolation. Seen in this light, the criticism against the yuan's devaluation runs counter to facts.
The West often targets China's large trade surplus for its attacks. But statistics show that last year, when the yuan remained unchanged against the greenback, China's trade surplus fell by about $700 billion, which obviously proves there is no direct relation between the yuan's exchange rate and the trade surplus.
(China Daily August 18, 2010)