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Jun 22, 2010, 09.52 AM IST
The global markets are in a tizzy on the back of China's plans to make its exchange rate more flexible. In an interview with CNBC-TV18, Kenneth Broux, Senior Economist, Lloyds gave his perspective on the de-pegging of the Yuan and the way forward for the currency markets.
However, while the capital markets reacted with enthusiasm to the news from Beijing, it is not at all clear just how much appreciation the PBOC will tolerate. Several analysts have predicted that USD/CNY could reach 6.5000 by year end, but such a move would have to occur against a background of sustained economic growth of 3% or better.
In an interview with CNBC-TV18, Kenneth Broux, Senior Economist, Lloyds gave his perspective on the de-pegging of the Yuan and the way forward for the markets.
Below is a verbatim transcript. Also watch the accompanying video.
Q: How do you read this move and where do you see the yuan headed?
A: I think itís a very small step, itís a symbolic step. I think itís very tactically orchestrated ahead of the G20 meeting which we have the next weekend obviously. I think the market is obviously pricing-in Yuanís strength or appreciation over 12 months, very small appreciation, 1.5% to 2% against the dollar. Todayís step is a very minor step in the bigger scheme of things. Itís a massive regime shift.
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