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Call for measures on shaky currency

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THE intervention by China's central bank to stabilise the yuan can succeed only temporarily, according to Hongkong Forex Association president Tam Ping-shing.

He said other measures were needed for long-term stability.

''Unless the exchange rate is stabilised, the interest rate increase announced earlier will be ineffective, because the gain in interest is not sufficient to offset the loss due to depreciation,'' Mr Tam said.

He called for the relaxation of rules restricting entry to the swap market.

''Market forces based on supply and demand should be the long-term objective,'' he said.

He said the volume of transactions at swap centres, estimated to be US$100 million a day, was too low to reflect the yuan's underlying value.

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