Bernanke: Yuan peg hurts Chinese economy too

NEW YORK (Forex News Now) – China’s currency peg hurts the Chinese economy just as it hurts U.S. exports, Federal Reserve Chairman Ben Bernanke said in an interview aired overnight on the CBS program “60 Minutes in a realtime forex news event.

In comments that will be of some interest to FX traders, Bernanke said the currency peg puts the Chinese economy at greater risk of inflation, as it prevents authorities from controlling the country’s monetary policy while China continues to grow at such a rapid pace.

“They need to continue doing what they had been doing, which is to allow their currency to appreciate to something more appropriate in terms of market value,” Bernanke said.

The Federal Reserve has come under recent criticism from China over accusations it is putting pressure on emerging markets while actively trying to push down the dollar.

But Bernanke responded in the CBS interview, saying: “Keeping the Chinese currency too low is bad for the American economy, because it hurts our trade. It’s bad for other emerging market economies.”