Renminbi volatility will continue says HKEx chief executive, Charles Li.
The Renminbi (RMB) has been making headlines
in recent days because of its decline relative to the US
In fact, the RMB has fallen the most since
new foreign exchange rate policies were introduced in 2005,
plummeting 1.4 per cent in only three weeks.
For a currency long assumed to be on a
one-way path towards further appreciation, this news has
naturally sparked a lot of discussion among analysts, investors
and the media.
Some believe the depreciation may be the
result of the People’s Bank of China wanting to
shake out speculators; others say it may be in preparation of a
wider trading band; while some believe China may be choosing to
devalue the currency for domestic reasons.
In my view, the reasons behind the change are secondary.
No matter what happens, the RMB is on a path to greater
internationalisation and increasing volatility – and
greater risk is a part of that.
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