Singapore, Oct 16: China is in a dangerous phase in its foreign exchange policy and must strengthen its institutions for the day it adopts a market-based system, a top World Bank economist said today. Homi Kharas, the bank's chief economist for East Asia and the Pacific region, told Asian journalists in a video conference that any country in transition from one arrangement to another is at its "most vulnerable."
"I think we've seen this with various countries that have been trying to join the euro during the run-up to their accession to the (European Union) and the adoption of fixed exchange rates," he said.
"You see it actually in most episodes of speculative attacks on currencies."
The US government has been turning up the heat on China to abandon the peg between its currency, the Yuan, and the dollar.
Washington blames the allegedly overvalued Yuan for shutting out US exports and destroying American jobs. Bureau Report