The Renminbi Goes Forth

For both China and America, the RMB-dollar exchange rate is important for achieving growth and a more balanced current account. But that dual objective requires structural change in the Chinese and US economies.

BEIJING – In June, the Peoples’ Bank of China (PBC), China’s central bank, announced an end to the renminbi’s 23-month-old peg to the dollar and a return to the pre-crisis exchange-rate regime adopted in July 2005. So far, however, the RMB’s appreciation against the dollar has been slow. Will the pace of appreciation accelerate enough to satisfy American demands? If it does, will global imbalances disappear sooner?

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