Trichet, Juncker to Go to China to Discuss Yuan Rate
European Central Bank President Jean-Claude Trichet, Jean-Claude Juncker, who heads the group of euro-area finance ministers, and European Union Monetary Affairs Commissioner Joaquin Almunia will travel to China before year end to discuss the yuan’s exchange rate, Juncker said.
“I will go with Mr. Trichet and Mr. Almunia to China before the end of the year,” Juncker told a press conference today in Luxembourg, where he serves as premier and Treasury minister. “This is an initiative I started two years ago.”
Trichet, Almunia and Juncker went to Beijing in November 2007 to push Chinese leaders for a faster “pace of appreciation” of the yuan, a plea that was rebuffed at the time by Premier Wen Jiabao.
China halted the yuan’s gains against the dollar in July 2008 after allowing it to appreciate 21 percent over the previous three years. That left the euro 10.6 percent higher versus the yuan over the previous 12 months as the European currency appreciated against the dollar.
The euro has depreciated 5.4 percent against the yuan since November 2007. That decline is smaller than those of the dollar and the British pound, which fell 8.4 percent and 28 percent versus the yuan, respectively, during the period.
European and U.S. policy makers have started pressing China and other emerging nations to shoulder more of the burden as exchange rates adjust to a rebalancing of the global economy.
‘Lack of Flexibility’
The U.S. Treasury Department yesterday criticized China for the “lack of flexibility” in the yuan and a buildup of foreign-exchange reserves, which “risk unwinding some of the progress made in reducing imbalances.”
Trichet said on Oct. 5 that some emerging economies must allow their currencies to strengthen against the euro and the dollar and said yesterday that excess foreign-exchange volatility is “an enemy” of global economic stability.
While two years ago the trio’s pleas were rebuffed by Chinese officials who said the yuan would enjoy greater flexibility only over time, this time their efforts may be more fruitful. China’s yuan forwards had the biggest weekly gain in more than six months on speculation the central bank will allow appreciation as exports and inflation pick up.
China’s foreign-exchange reserves, the world’s largest, surged to a record $2.27 trillion at the end of September.
Trichet also has had to grapple with an 18 percent surge of the euro against the dollar since March, which threatens to damp euro-area exports and curb the nascent recovery in the economy of the 16 nations using the euro. European exports fell 5.8 percent in August, the most in seven months, data showed today.