“We don’t believe the yuan is undervalued,” Wen Jiabao told journalists this week. The Chinese premier added: “China will choose the right time to resume the fluctuation of the yuan… instead of being subject to foreign pressure.” That’s not likely to satisfy members of America’s Congress. More than 100 of its members greeted Wen’s remark by signing a letter demanding that the Obama administration designate China as a “currency manipulator”. Cornell University’s Eswar Prasad told the Financial Times the situation was becoming risky. “On both sides the Chinese and US leadership feels you have to keep the situation on an even keel, but with domestic feelings running high there is a risk that it gets out of control.”
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