The Chinese Prime Minister Wen Jiabao in his speech to the Chinese nation reiterated that Yuan exchange rate will be kept stable and stressed that more internal consumption is needed for a full recovery. The Prime minister pledged to keep monetary conditions easy to support growth while providing a rather carful outlook for the Chinese economy and the global economy as a whole. The Chinese Yuan has been kept by the Chinese authorities at around 6.82 per Dollar to support Chinese exports the main engine of Chinese growth. Lately the Chinese central bank raised the reserve requirements for banks in china to curb credit lending and trim inflation within the 3% target. As Real-Estate prices spur fears of reaching bubbly zone many investors were betting on a Yuan appreciation to ease the bubbly pressures. However the Chinese prime minister stated Yuan will be kept stable in spit the fact that the Chinese economy grew in 2009 more than the 8% , signaling Chinese policy makers are still cautious on the global economy. The Yuan exchange rate is controlled by the Chinese government and does not trade openly like other currencies in developed economies. Investors see the Yuan exchange rate as an indicator of Chinese economic strength and the region as a whole. Hence persistence by Chinese authorities to keep Yuan stable might signal recovery is still fragile thus raising questions on investors’ bets on the currencies linked to China’s growth such as the Aussie and the Kiwi.
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