China’s ‘Shift in Rhetoric’ May Signal Faster Yuan Gains

A “shift in rhetoric” indicates that China may be on the verge of allowing faster gains by the yuan to damp import costs that may fuel inflation, Capital Economics Ltd. said.

“Several senior policymakers have signaled in the last few days that China will allow the renminbi to strengthen in order to dampen imported price pressures,” said London-based economist Mark Williams, a former adviser on China to the U.K. Treasury. “This would be a significant departure -- the exchange rate is usually viewed narrowly as an instrument of trade policy rather than as a monetary policy tool.”