China is not the Currency Manipulator!!!

The diplomacy games have started up once again between China and the USA, two economic giants currently. USA has been the economic power since long but China has been approaching recently and approaching good, almost threatening the US economy. There are always presumptions made across the globe that China has been undervaluing its currency which is actually not benefiting the global economic equity and interestingly, USA did work a lot to convince the world that China has not been working well for the global economic fraternity. But then, coming to this period of time, the treasury department has said that China is not the one who manipulated the currency though it admits that the yuan is undervalued significantly.

The statistics suggest that yuan has gained almost a 9.3 percent in the nominal terms whereas 12.6 percent in real terms against the dollar since 2010. Experts claim that both the country administrations have come to the grounds of diplomacy escaping the fact that both should have come to the confrontations for the discussions and then come up with appropriate decisions. Recently, China has gone through fresh elections and USA has shown up in the right time starting to convince China to work together, with mere hope of success. The diplomatic lines say that China has reduced the intervention and it is already on the steps to liberalize its controls on capital movements which happen to be a part of the long term plan establishing a flexible exchange rate regime. It is not only now when USA has been saying this but even Mitt Romney during the presidential elections had argues that China has been intentionally suppressing its currency value which is making its goods cheaper globally and also creating unemployment in the USA.

Chinese Central Bank Governor Zhou Xiaochuan, on the other hand, has said that the full convertibility of their currency is their next step in an overhaul of the exchange-rate system. It is after almost the seven quarter slowdown that the largest economy in Asia is showing the signs of recovery and the two big administrations have shown some signs of possible confrontations.

Both the economies have large impact on the overall commodity market, therefore all global partners have been waiting for the best!!!