Foreign funds to return home as RMB slows vs dollar
25 September 2008
Overseas investors are pulling money out of China as the US financial crisis puts a pinch on capital and the renminbi's appreciation against the US dollar slows, the South China Morning Post reported, citing Martin Currie Investment Management. A lack of capital due to the financial crisis has caused an initial round of repatriation of funds, said Chris Ruffle, head of Martin Currie in China. "The next round will be when it becomes apparent that the currency will no longer go upward" versus the dollar, he added. China's currency has gained just 0.45% against the dollar since June, on pace for the smallest quarterly rise since the peg to the dollar was removed in July 2005. Chen Dongqi of the National Development and Reform Commission's Macroeconomic Research Institute said that speculative capital flowed out of the mainland in June, and possibly in July and August as well.