Why does China still have a ‘pegged’ currency, like those of Iran, Laos, Belarus?
Time is ripe for world’s second-largest economy to cut the ties that bind yuan to the US dollar, expert says
China should finally free its currency from the US dollar peg to which it has been tied for more than 30 years, a leading Chinese economist said.
As the world’s second-largest economy, it was no longer appropriate for the country to have an exchange rate system akin to those used by Iran, Belarus, Ethiopia, Uzbekistan or Laos, Yu Yongding, was quoted as saying in an interview published on Monday by China Securities Journal.
The long time advocate for a market-based exchange rate system – he was an adviser to the People’s Bank of China when in 2005 it first announced plans to free the yuan from the dollar – said it was time for the current “soft pegging” system to be discontinued.
“The time to turn to a free float [yuan] exchange rate is basically ripe after more than 20 years of trials,” the senior research fellow at the Chinese Academy of Social Sciences said.