RMB still by de facto remain peggy with USD.

Huge inflow of USD for whatever reasons (investment, speculation, conspricy, loss of condidence on USD whatsoever) into China causes the central bank has to buy USD with RMB, leading to sharp increase of USD reserve. Since there are more demand of RMB than USD, theoretically RMB has high pressure of price appreciation (if gov intervene less). However, if RMB increases more, more and more non-RMB will flow into China for whatever reason and thus the government has to control the exchange rate using foreign reserve. I believe the risk for RMB to devalue is small in near term.

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• 谢了楼上两位老大 -海赖- ♂ (0 bytes) () 06/18/2008 postreply 11:39:08