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Composition of currency basket revealed
Governor of China's central bank Zhou Xiaochuan yesterday revealed details of the basket of currencies used to determine the value of the yuan.
The Singapore dollar, pound sterling, the Malaysian ringgit, the Russian rouble, the Australian dollar, the Thai baht and the Canadian dollar are also considered in the calculation, Zhou said. Speaking at the opening of the second headquarters of the People's Bank of China in Shanghai, Zhou explained that the currencies were chosen for their share of China's foreign trade, foreign debt and foreign direct investment. At the moment the United States, the euro zone, Japan and South Korea are China's biggest trading partners. "Their currencies are naturally the main ones in the basket," Zhou said. Any economy that has an annual bilateral trade volume of more than US$10 billion cannot be neglected in the basket, he said. Those with an annual trade volume of more than US$5 billion should also be considered, he added. Zhou did not give details of the weightings of individual currencies in the basket. On July 21, China cut the yuan's years' peg to the dollar, allowing it to
move in a restricted float - to rise or fall by 0.3 per cent a day against the
greenback.
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