According to analysts, the sharp fall of the yuan this week does not show a major change in the foreign exchange rate policy or its long-term currency revaluation in this country. But the chief economist of Bank of Communications Lian Ping said the yuan should not rise too fast because that would hurt exporters, who have already hit by the global financial crisis.

Started on Nov 4, the two-day China-US Strategic Economic Dialogue (SED) is likely to witness Washington pushing greater pressure on Beijing for the revaluation of the yuan. However, according to the analysts, amid such global financial turbulence, China’s foreign exchange policy should help domestic economic growth but not rise too fast against the US dollar. The fast revaluation of the yuan would hurt its export, increase unemployment and further harm the global economy because “China is also one of the largest importers in the world”, said Liu Dongliang, currency analyst with China Merchants Bank.

The yuan fell dramatically during the three trading days of this week. Its central parity dropped to 6.85 against one dollar and remained at the level on Wednesday. However, the Dow Jones figures showed that the exchange rate of the yuan was down 499 points from 6.8349 to 6.8848 against the dollar on Monday. This was pushed by market transactions.

Rumors spread as the market rate changed. It is said that China would adopt a “weak-yuan” policy to boost its falling exports. “But I’m not sure whether the central bank would change its policy,” said Liu. “We need to monitor the trend during the coming days to decide the official stance.” His point has been agreed by the head of China economic research unit of UBS Wang Tao. He noted that it is not the right time to determine whether it is the significant change in exchange rate of the latest move.

Since August 1, even though hardly moved against the dollar, the yuan has up by about 10 percent against a basket of currencies, said Wang. The exporters has already significantly hit by rising costs as well as sharply reduced falling overseas demand. The revaluation of the yuan has made their lives more difficult, and it is likely to hurt exporters further next year.

A stimulus package of $586-billion was announced and by the government on Nov 9 and the interest rate was cut by 1.08 percent. It aimed to help stimulating domestic demand and keeping the economy from global crisis to the largest extent.

Experts keep a positive attitude toward the revaluation of the yuan and they agreed to have the yuan fall a little because it would be helpful for exporters and make the stimulus package more effective.

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