Adjusting China's exchange rate

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China's exchange rate policy itself is seriously flawed given its current macroeconomic circumstances and its longer-term policy objectives. Based on ongoing research with my Institute colleague Nicholas Lardy (Goldstein and Lardy 2004), I argue below that (i) the renminbi (RMB) is currently significantly undervalued?on the order of 15 to 25 percent; (ii) China has been "manipulating" its currency, contrary to IMF rules of the game; (iii) it is in China's own interest, as well as in the interest of the international community, for China to initiate soon an appreciation of the RMB; and (iv) China should neither stand pat with its existing currency 3 regime nor opt for a freely floating RMB and completely open capital markets...
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Based on ongoing research with my Institute colleague Nicholas Lardy (Goldstein and Lardy 2004), I argue below that (i) the renminbi (RMB) is currently significantly undervalued?on the order of 15 to 25 percent; (ii) China has been "manipulating" its currency, contrary to IMF rules of the game; (iii) it is in China's own interest, as well as in the interest of the international community, for China to initiate soon an appreciation of the RMB; and (iv) China should neither stand pat with its existing currency 3 regime nor opt for a freely floating RMB and completely open capital markets...
Showed next 250 characters

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