“I believe very strongly that it is in China’s interest to have currency flexibility, to keep moving the renminbi,” Paulson said today at the Boao Forum for Asia, using another name for the Chinese currency. “It gives the government a very valuable and I think it is going to become an increasingly necessary policy tool to deal with inflation.” An appreciation of the yuan would also help spur domestic consumption, he said.
Paulson’s comments come as speculation increases that China will raise the value of the yuan, which has been pegged to about 6.83 to one U.S. dollar since July 2008. On April 8, Treasury Secretary Timothy Geithner made an unscheduled visit to Beijing to meet with his Chinese counterpart Vice Premier Wang Qishan in Beijing.
“China has benefited enormously from reform and opening up and I think continued reform is very important and the renminbi is one aspect of that,” Paulson said at the forum in southern China’s Hainan province.
And from another Bloomberg report:
Billionaire investor George Soros said China and the U.S. have probably come to an agreement on the yuan amid speculation the currency’s 21-month-old peg to the dollar may be scrapped.
“I think a deal has been struck,” Soros said in a Bloomberg Television interview today in Cambridge, England. “What the arrangement is, I’m not privy to, but I think there is an understanding and there will be flexibility on both sides.”
U.S. Treasury Secretary Timothy F. Geithner met in Beijing yesterday with Chinese Vice Premier Wang Qishan as American lawmakers push for action to rein in a U.S. trade gap with China that was $227 billion last year. Geithner last week postponed an April 15 deadline for a U.S. review of foreign-exchange policies amid pressure from Congress to brand China a currency manipulator.