WHY IS CONTROL OF THE RENMINBI CONTROVERSIAL?

PEI-LING LIUNILAR THEIN

ARTURO PEGUERO

OUTLINE

• Current Situation

• Why RMB devaluated

• Conclusion

CURRENT SITUATION

• 1 USD = 6.162 RMB

CURRENT SITUATION

• Fluctuation History

EFFECTS OF CONTROL

POSITIVE

• EXPORTS

• UNEMPLOYMENT RATE

• GROWTH RATE

NEGATIVE

• INTERNATIONAL PRESSURES

• NOT FOR DOMESTIC ECONOMY REFORM

• RMB INTERNALIZATION

• EXPECTATION

SOURCE OF CONTROVERSY

• Forcefully keeping RMB undervalued

• Countries argue it gives China an unfair advantage in exports against countries with free floating currencies

• Unfair Increased competitiveness (Cheap) of Chinese products in international markets

LETTING GO

• Appreciation of RMB:

• Good for domestic economy reform:

• Domestic Consumption

• Growth Rate

• RMB internalization

REASONS TO LET GO

• Economy reform

• Stable society

• Environment protection

REASONS TO LET GO

• Avoid Future Crashes

• RMB Undervalued

• Balassa-Samuelson Relationship (economic theory)

Thank you