Asian Development Bank president says yuan ‘was overvalued and now at real market level’
Takehiko Nakao, president of Asian Development Bank, also expects China’s economy to keep growing steadily as it shifts to consumption-driven economy with deeper service sector
The yuan’s recent depreciation has moved it closer towards its real market value, says head of the Asian Development Bank (ADB) – dismissing fears that China may export deflation to its Asian neighbours by flooding goods made cheaper by a weak currency.
Takehiko Nakao, president of the ADB, also said that while China’s economy might no longer expand at a 10 per cent pace seen in the past, it would continue to grow steadily as it shifted to a consumption-driven economy with a deeper service sector.
“China used to intervene to prevent excessive yuan strengthening, causing some friction with the United States,” Nakao, Japan’s former top currency diplomat, told a seminar in Yokohama, in Japan, on Wednesday.
“What’s been happening recently is that the yuan has become overvalued ... depreciation of the yuan is in line with its real market value.”
The People’s Bank of China (PBOC) has repeatedly intervened to stabilise the yuan since the August 11 devaluation – billed as free-market reform – sent shockwaves through global markets and depressed emerging currencies.
Nakao acknowledged that the recent market turmoil partly reflected investors’ concern over whether Chinese authorities could guide their economy towards a soft-landing.