The challenge for the government and business is to manage the next upturn so that a boom-bust cycle is minimised.
Meanwhile, the Kina remains an overvalued currency and better macro balance could be achieved if faster depreciation occurred.
The currency’s fair value on our estimate is around $US0.23-0.25.
At this level, the Kina would likely remove uncertainty in the foreign exchange market, add liquidity and help clear the backlog of import orders, maximise import substitution and assist Kina-exposed industries including agriculture and mining.
Dr Kishti Sen is an international economist at ANZ