Chinese currency may appreciate 5 per cent: Goldman Sachs
17 Feb 2010
Goldman Sachs' chief economist, John O'Neill, has hinted that China may move to strengthen its currency as much as 5 per cent in a bid to slow the pace of its economic growth.
''I have a strong opinion that they're close to moving the exchange rate,'' O'Neill told the Bloomberg news agency. ''Something's brewing. It could happen anytime.''
O'Neill's made his comment soon after China's central bank announced a 50 basis-point rise in commercial bank reserve requirements in a bid to soak up excess liquidity.
''They need to do something to slow the economy down and deal with the inflation consequence,'' said O'Neill. ''The more they do – and the sooner – the better.''
O'Neill said China may allow its currency, the renminbi, also known as the yuan, to appreciate as much as 5 per cent in a one-time revaluation and also allow it to trade against a larger basket of currencies.
O'Neill is credited with having coined the term 'BRICS,' representing the fast moving economies of Brazil, India, China and Russia.