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Speculators to Lose Money on RMB Bet
2005-09-19 15:16:09
A top Chinese economist says speculators will lose money on betting the yuan revaluation.

Related Event: RMB Revaluation

Director of the China Economic Research Center in Peking University, Lin Yifu, warned that under the managed floating exchange system, the Reminbi will not be revalued by large margins again, so the international money speculator will fail to earn a profit.

"Since China's capital account is not opened, they (speculators) are unable to invest in RMB directly. This adds costs to change foreign currency into Reminbi by 5 percent", the International Financial Newspaper quoted him as saying during a meeting on China's economic situation on Sunday in Beijing.

He estimated that the total cost for betting on RMB's revaluation would be around 10 percent.

"However, according to China's present economic situation, the United States won't continue its pressure on the RMB, and the Chinese government won't revalue the yuan again."

"Under such circumstances, the band for RMB fluctuation will be between 1 to 2 percent."

The yuan closed last Friday at its highest level versus the dollar since the July 21 revaluation for the third straight day, finishing at 8.0871 versus the dollar.

(Photo source: Xinhua/Director of the China Economic Research Center in Peking University Lin Yifu.)

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