Fast yuan rise will be short-lived -China newspaper

Published 10/17/2010, 09:29 PM
Updated 10/17/2010, 09:32 PM

BEIJING, Oct 18 (Reuters) - The accelerated yuan appreciation of recent weeks will not last long because China's trade surplus will soon peak, an official state newspaper reported on Monday.

An article in the overseas edition of the People's Daily said there had not been sufficient improvement in the economy at home or abroad to justify a speedy rise in the exchange rate.

China freed the yuan from a 23-month peg to the dollar in June and has let it gain about 2.8 percent against the dollar since then, with most of its rise coming after August.

The article cited Wang Jun, a researcher at the Chinese Academy of Social Sciences, as saying that China should not and would not bow to foreign pressure.

"If the yuan rises quickly under joint pressure from the United States and some other nations, that will mean China is manipulating its currency, won't it?" the report cited Wang as saying.

Wang's phrase appeared to be a reference to a decision that the U.S. Treasury Department had been due to make last week about whether to classify China as a currency manipulator. The United States opted to delay that decision until late November after U.S. congressional midterm elections and a G20 summit are out of the way. [ID:nnN15220633]

The People's Daily said that pressure on the yuan to rise would soon decline because China's trade surplus was topping out. It dipped to $16.9 billion in September, a five-month low.

(Reporting by Langi Chiang and Simon Rabinovitch; Editing by Ken Wills)

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