Yuan is no longer undervalued, says IMF
China’s tightly-controlled yuan currency is no longer undervalued, the International Monetary Fund said in a report on Tuesday.
“Our assessment now is that the substantial real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued," the IMF said.
The IMF had previously labelled the yuan as modestly undervalued despite its gradual appreciation since 2005.
The IMF said China still faced risks from unsustainable credit and investment growth, and called on the government to quicken reforms, including making the yuan more flexible.
It also said that China could achieve a floating exchange rate – determined only by a free market’s supply and demand rather than an authority’s manipulation – within two to three years.
The comments came in a statement issued after a visiting IMF team completed a consultation with Chinese officials.