Revaluation of China's Currency Good for Australia

Yesterday's decision by the People's Bank of China to revalue the renminbi is good for Australia's exports and international markets, Acting Prime Minister and Minister for Trade, Mark Vaile said today.

On 21 July, China announced that it had revalued its currency by 2.1 per cent against the US dollar and that the value of the renminbi would now be managed against a basket of currencies.

"China is Australia's second largest export market and the revaluation of the renminbi will make Australian exports cheaper, having a positive impact especially on resources and agriculture products," Mr Vaile said.

Mr Vaile said the Chinese Government's decision to revalue its currency and delink from the US dollar was also a positive step for the Chinese economy and the Chinese people.

"It is in line with China's stated long-term policy of moving to a more market-orientated exchange rate and is a sign of the growing maturity of the Chinese economy continuing the economic reforms which have delivered more than two decades of significant economic growth drawing millions of people in China out of poverty," Mr Vaile said.

"There has been considerable international speculation about a revaluation of the renminbi and yesterday's decision by China to adopt a more flexible exchange rate regime for its currency will, in the long run, bring greater stability to global markets. The impact on Australian and international inflation will be negligible."

The renminbi will now be valued at 8.11 to the US dollar compared to 8.28 and will continue to move in a tight trading band of plus or minus 0.3 per cent.

Contact: Carissa Buckland 026277 7420