China will adjust the float range of its currency exchange rate at the proper time based on market situation and economic and financial circumstances, said a report released yesterday by the People's Bank of China, the central bank, on monetary policy in the second quarter of this year.

Bank of China Governor Zhou Xiaochuan has said that the 2.1 percent appreciation of the yuan against the US dollar does not mean that there will be further adjustments. Picture was taken on July 31, 2005. [AFP]

According to the domestic and international economic and financial circumstances, the central bank will manage the yuan's exchange rate on the basis of market supply and demand and with reference to a basket of currencies.

This will maintain the yuan's basic stability at a reasonable equilibrium, keep the basic balance of international payment as well as safeguarding the stability of the macro-economy and financial market.

After China unexpectedly allowed its currency, the yuan, to appreciate by a modest 2 per cent on July 21, the trading price between US dollars and yuan can fluctuate within 0.3 per cent in inter-bank foreign exchange market, and the trading price between non-US dollars and yuan can be fluctuated within 1.5 per cent.

"A revaluation of renminbi by 2 per cent, effective at the beginning of the exchange rate regime reform, does not in the least imply an initial move which warrants further actions in the future," the central bank announced solemnly.

Reform of the RMB exchange rate regime has been proceeded in an active, controllable and gradual way, the central bank said.

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