Comments by Mohamed Ariff, on RMB Bloc in East Asia: Too Early to Talk About It?

Mohamed Ariff: The Chinese economy had made a substantial increase in GDP size from US$ 456 billion in 1989 to US$ 12,230 billion in 2005. Over a span of 16 years prior to 2005, the RMB was accepted at 5.8 to one US$ ever since the currency was devalued by 30 percent in 1994. A remarkable policy shift took place in July 2005, when China adopted crawling peg currency management. Simultaneously, it revalued the currency from RMB 8.28 to 8.11 to one US$. In the years since these twin changes in 2005, the currency has appreciated via crawling peg management to the January 2018 rate of RMB 6.50 RMB to one US$. On the back of these desirable changes in the value of its currency over the post-2005 period, China put a new policy in place to settle international payments of selected trading partners to engage in financial transaction with...