"RMB should show an obvious uptrend next year, and the magnitude of the appreciation rate will most likely be large," forecast Yu Yongding, director of the Institute of World Economics and Politics under the Chinese Academy of Social Sciences and commissioner of the Monetary Policy Committee (MPC) of the People's Bank of China (PBC), at the Summit Forum of China's Top 200 Exporters-Importers held last week.

As Yu noted, "For a while in the past, people have been talking about the possibility of an RMB appreciation, and the Chinese government has adopted certain policies and measures to give preferential treatment to exporters and tried hard to avoid causing adversity to these enterprises' operation due to the RMB issue. However, exporters should understand the policies and difficulties of the central government, since some issues are inevitable when examined objectively. Hence, no matter whether there is an appreciation and what the magnitude would be, exporters must prepare for rainy days."

Yu also analyzed the reason of an RMB revaluation next year. In terms of the supply-demand relationships in the monetary market, China is already the world's largest forex reserve nation. In order to avoid the rapid growth of basic money supply, the PBC uses the primary means of issuing bank papers to neutralize the effect on the growth of basic money supply caused by increases in forex. In this way, RMB supply will definitely tighten. In addition, the US dollar has depreciated relative to other currencies this year, so the RMB exchange rate versus USD will rise according to the RMB Basket Composition policy China has been using as a reference.
 
Editor: Yan