Former Financial Secretary Antony Leung Kam-chung has backed China’s move to devalue its currency, saying that lowering the daily midpoint rate of the renminbi does not amount to market intervention.
Leung, who is currently chief executive of Nan Fung Group, told the Hong Kong Economic Journal that the recent fluctuation in the yuan’s exchange rate is a sign that the currency is embracing the market mechanism.
In the long run, he said, the renminbi should not be pegged to a single foreign currency but to a basket of currencies.
He also said it is natural to see hot money flowing out of the country following the steep depreciation in the Chinese currency’s value.
On Tuesday, the midpoint rate was fixed at 6.3966 against the US dollar, up 3 basis points from the previous day.
Data from the Bank of International Settlements shows the real exchange rate of the renminbi has surged 4.88 percent in the first seven months of the year, although the spot rate has edged 0.09 percent lower over the same period.
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