Jul 27, 2010

"The United States is carefully monitoring "how far and how fast" China's currency appreciates, Lael Brainard, undersecretary of the Treasury for international affairs, told a lunchtime crowd at the Peterson Institute for International Economics.

But she deferred on the follow-up: How much does Washington think the Chinese currency should rise? What would be considered a fair pace of appreciation? There are estimates that the Chinese currency is undervalued by as much as 40 percent -- a potentially huge boost to Chinese exports.

 "We have not stated a benchmark" for the currency's revaluation, Brainard said. (For the record, the renminbi has risen less than 1 percent since China announced a month ago that it was reapplying a "flexible" exchange rate, presumably allowing its currency to drift higher on the open market as a way to curb its large trade surplus and aid in the rebalancing of world trade flows. Members of Congress have promised a legislative response.)"

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