Stable RMB exchange rate helps emerging markets recover
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As energy, agricultural and mineral products make up a large portion of emerging economies' exports, what these countries care most is not the exchange rate of the RMB, but the stable growth of the Chinese economy and its steadily rising market demand, he said.
A sharp appreciation of the RMB may cause prices of global primary products to skyrocket in the short run and lead to a new "bull market," thus increasing the emerging economies' export revenues in the short term, he said.
However, consequently, China's economic recovery could face ups and downs, which would lead to a decrease of real demand.
And that would also cause a double dip in the world economy and bubble burst in the prices of primary products, the consequences of which the emerging economies would find it hard to bear, said Castro.
Therefore, maintaining a stable exchange rate for the RMB is undoubtedly the most favorable for emerging economies, he said.
Castro also said each nation has absolute sovereignty over its currency policy which brooks no intervention.
As all economies and financial markets in today's world are inter-related and inter-dependent, nations can cooperate and coordinate on the issue of exchange rate policy, Castro said. But groundless charges against and gross interferences in a country's exchange rate policy will not be accepted, he added.
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