BRUSSELS (AFP) - European Union economic commissioner Joaquin Almunia warned that the undervaluation of China's currency was an economic headache for Europe.
"The fixed exchange rate between the US dollar and the renminbi (yuan) is creating problems, not only in this part of the world but also in China itself," he told a symposium on economic reform in Europe.
"We have to remind some Asian countries that they have to create more flexible exchange rates," the Spanish commissioner said.
Foreign critics have long argued that the yuan's decade-old peg to the dollar has now left the Chinese currency seriously undervalued, giving Chinese exporters an unfair advantage in global markets.
Speculation is mounting among currency traders that the yuan may soon be revalued.
But Chinese state media, quoting a top financial official, said Wednesday that the country would need to develop an onshore derivatives market among other instruments before the peg can be scrapped.
11/10/2004 - 18:33 GMT - AFP