RMB new fixing rate regime not a move to depreciate for export gain
RMB drops 1.9pc
The very small – 1.9pc- change in the rmb usd rate has been greeted in the media as if it was a 25pc devaluation.
This article from Dr Shen puts things in perspective. He suggests it was a move to improve the prospect of the rmb joining the sdr of the imf. This is important to China’s objective of the rmb becoming a reserve currency.
It also suggests that the USA and China are cooperating.
To give you a sense of how minor 1.9pc is – it is the same as the pound euro rate moving from 1.50 to 1.47, or the euro dollar moving from 1.12 to 1.10. Both of those happen very frequently.
So it’s may all be more about imf than export pricing.