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Talk of the Day -- Chinese yuan more stable than greenback, euro

Talk of the Day -- Chinese yuan more stable than greenback, euro

Taiwan's central bank governor Perng Fai-nan has thrown his weight behind China's currency, saying the Chinese yuan is even more stable than the U.S. greenback and the euro, the United Evening News reported Wednesday. Perng further said he believed the Chinese currency, also known as the renminbi, would someday become a major currency around the world once China liberalizes its capital account and allows free exchange of its currency. The following is an excerpt of the United Evening News report on Perng's remarks on the Chinese currency: Perng said the greenback and the euro are like moving aircraft carriers. In comparison, the renminbi appears far more stable, even though it is facing pressure to appreciate, he said. The U.S. Senate overcame a procedural hurdle on the China currency bill Monday, which could set the stage for final passage later this week as part of its efforts to force China to raise the value of its currency. The bill, which attempts to counter the economic harm to U.S. manufacturers caused by China undervaluing its currency, would impose tariffs on Chinese imports and make it easier to investigate allegations of currency manipulation. Perng said the question of whether the yuan is undervalued depends on the formula used to calculate its value. The currency may appear undervalued in terms of China's gross domestic product and the Consumer Price Index, but not if it is calculated on the basis of unit labor cost, he said. He further said many items that the U.S. now imports from China are no longer available in the continental U.S. Perng said he would not wish to see a trade war between the U.S. and China, as it would do the world no good. Furthermore, a China-U.S. trade war would deal a severe blow to Taiwan, he said. Fielding questions at a Legislative Yuan session, Perng also said that the central bank's efforts to prevent the Taiwan dollar from depreciating too drastically was the major reason behind foreign institutional investors' withdrawal of their capital from the local markets. (Oct. 5, 2011). (By Sofia Wu)