The renminbi could face further pressure among other emerging market currencies as the US dollar moves into an upward cycle, said Hong Kong Monetary Authority chief executive Norman Chan Tak-lam.
The Chinese unit, however, is unlikely to depreciate continuously, Chan said, arguing that stable foreign trade growth will provide support for the currency.
China’s recent adjustment in the daily fixing for the mid-rate of its currency should be seen as a move aimed at imparting more market elements into the exchange rate mechanism, Chan told Xinhua news agency.
In other comments, the HKMA chief said that Hong Kong will see more opportunities being thrown up as China internationalizes the renminbi, according to the Hong Kong Economic Journal.
The International Monetary Fund, meanwhile, issued on Friday a report that reviewed China’s commitment under the Article IV of the IMF’s Articles of Agreement.
In the report, the IMF welcomed China’s efforts to improve its exchange rate formation system but said Beijing should step up reforms further.
China should aim to put in place a floating rate system in two to three years in preparation for a freely convertible currency, the IMF said.
Meanwhile, rules must be established in relation to any interventionist moves, it said.
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