A Quote by Elvira Nabiullina
A flexible exchange rate is important, and it shouldn't be artificially restrained because of the needs of the economy.
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A nation's exchange rate is the single most important price in its economy; it will influence the entire range of individual prices, imports and exports, and even the level of economic activity. So it is hard for any government to ignore large swings in its exchange rate.
If a country is an attractive place for foreigners to invest their funds, then that country will have a relatively high exchange rate. If it's an unattractive place, it will have a relatively low exchange rate. Those are the fundamentals that determine the exchange rate in a floating exchange rate system.
It's a good thing that it is getting simpler to register a company in China, it is good that the exchange rate of our currency is getting more flexible and that it's getting easier for Chinese businesspeople to travel. All of this opens up our economy.
The lesson for Asia is; if you have a central bank, have a floating exchange rate; if you want to have a fixed exchange rate, abolish your central bank and adopt a currency board instead. Either extreme; a fixed exchange rate through a currency board, but no central bank, or a central bank plus truly floating exchange rates; either of those is a tenable arrangement. But a pegged exchange rate with a central bank is a recipe for trouble.
China became the second biggest economy in the world by pegging their currency to the dollar at an artificially cheap rate.
It seems to me that a market exchange rate which is not artificially controlled by central banks enables one to balance the interests of different market players - exporters and importers, investors, borrowers, lenders.
We have believed for many years, much earlier than anyone else was talking about this issue, that it was in the interest of China to evolve to a more flexible exchange rate system.
The U.S. berates China for its exchange rate policy, which Washington doesn't like. But one-sided pressure on China to change its exchange rate is misplaced.
Exchange-rate stability is extremely important.
What is the right exchange rate at one point is not necessarily the right exchange rate at another.
But that's not enough: To maintain energy security, one needs a supply system that provides a buffer against shocks. It needs large, flexible markets. And it's important to acknowledge the fact that the entire energy supply chain needs to be protected.
The reality is the most important thing that can be done are these permanent changes like to the tax code, reduction of government spending. These are the things that pop up in economy and move it in the right direction, start to make it an economy that is moving because of the money in the private economy. When you think about it, when the Fed is lowering an interest rate, what it's doing is it's creating more liquidity. It's putting more money into the economy. The same thing happens when you reduce the tax except if happens from physical policy.
The IMF insisted that both Russia and Brazil maintain their currency at over-valued levels. Who are you protecting when you try to maintain that exchange rate by having high interest rates? You're protecting domestic and foreign firms that have gambled on the exchange rate. And who is paying the price? The small businesses that did not gamble [and no longer can afford loans], the workers who are going to be put out of jobs.
The Chinese economy is growing at the rate of 9 percent; the Indian economy growing at the rate of 8 percent - enormous I think opportunities for two-way flow of trade, technology and investment.
After the maxi yuan depreciation of 1994 and until 2005, exchange-rate fixity was the order of the day, with little movement in the CNY/USD rate.
Monetary policy is like juggling six balls... it is not 'interest rate up, interest rate down.' There is the exchange rate, there are long term yields, there are short term yields, there is credit growth.
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