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Push for flexible yuan and forex rate
By Aileen Wang and Kevin Yao |
September 30, 2010, Thursday
|
Print Edition
Print Edition
CHINA will increase the flexibility of the yuan and improve the way it manages the exchange rate with reference to a basket of currencies of the country's trading partners, the central bank said yesterday.
The statement of intent came ahead of an expected vote by the United States House of Representatives on a bill that would let the US impose duties on goods from countries with undervalued currencies.
"We will further improve the yuan's exchange rate formation mechanism, let market supply and demand play a key role in its adjustment with reference to a basket of currencies and increase exchange rate flexibility," the People's Bank of China said in a summary of the third-quarter meeting of its monetary policy committee.
The yuan rose as high as 6.6825 to the US dollar yesterday. The currency has now gained almost 2.2 percent against the dollar since China scrapped a 23-month-old peg to the greenback on June 19 and said it would let the currency resume a managed float.
Nearly all of the increase has occurred this month, coinciding with mounting US pressure on Beijing to permit a faster rise in a currency that International Monetary Fund economists estimate is 5-27 percent undervalued.
The yuan has now risen 24 percent against the dollar since July 2005, but US lawmakers say Chinese exporters still have an unfair currency advantage in global markets.
China retorts that its big trade surplus with US comes about because Americans save too little and no longer make the goods China sells.
The PBOC's 15-member policy committee, chaired by Governor Zhou Xiaochuan, advises on the level of the yuan and interest rates, but key decisions have to be passed by the State Council.
The central bank reaffirmed its long-standing "appropriately loose" monetary policy stance and said the economy was growing as it expected.
"The overall performance of China's economy is sound, and it continues to head in the expected direction in line with macroeconomic adjustments," it said. "But managing inflation expectations and maintaining relatively fast economic growth while adjusting the structure of the economy remains an arduous task."
China has been reeling in breakneck anti-crisis bank lending, curbing property speculation and closing down energy-guzzling factories.
The statement of intent came ahead of an expected vote by the United States House of Representatives on a bill that would let the US impose duties on goods from countries with undervalued currencies.
"We will further improve the yuan's exchange rate formation mechanism, let market supply and demand play a key role in its adjustment with reference to a basket of currencies and increase exchange rate flexibility," the People's Bank of China said in a summary of the third-quarter meeting of its monetary policy committee.
The yuan rose as high as 6.6825 to the US dollar yesterday. The currency has now gained almost 2.2 percent against the dollar since China scrapped a 23-month-old peg to the greenback on June 19 and said it would let the currency resume a managed float.
Nearly all of the increase has occurred this month, coinciding with mounting US pressure on Beijing to permit a faster rise in a currency that International Monetary Fund economists estimate is 5-27 percent undervalued.
The yuan has now risen 24 percent against the dollar since July 2005, but US lawmakers say Chinese exporters still have an unfair currency advantage in global markets.
China retorts that its big trade surplus with US comes about because Americans save too little and no longer make the goods China sells.
The PBOC's 15-member policy committee, chaired by Governor Zhou Xiaochuan, advises on the level of the yuan and interest rates, but key decisions have to be passed by the State Council.
The central bank reaffirmed its long-standing "appropriately loose" monetary policy stance and said the economy was growing as it expected.
"The overall performance of China's economy is sound, and it continues to head in the expected direction in line with macroeconomic adjustments," it said. "But managing inflation expectations and maintaining relatively fast economic growth while adjusting the structure of the economy remains an arduous task."
China has been reeling in breakneck anti-crisis bank lending, curbing property speculation and closing down energy-guzzling factories.
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