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Banker: No official adjustment of yuan rate
(Reuters)
Updated: 2005-11-10 12:59
China will not again adjust the yuan exchange rate as it did in July, and
will instead let market forces play a main role in setting its value, deputy
central bank chief Xiang Junbo was quoted on Thursday as saying.
A currency trader
counts yuan banknotes in Beijing in this undated photo.
[AFP] | Chinese officials have repeatedly rejected
market speculation of another one-off currency adjustment even though many
economists believe July's 2.1 percent revaluation was too modest.
The United States has also continued calling for a stronger yuan.
"In the future, the renminbi (yuan) exchange rate will be mainly decided by
market supply and demand and there won't be another one-off official
adjustment," Xiang said in a speech delivered on November 9 at EuroFinance
meeting and posted on the central bank's Web site.
China has let the yuan rise by just 0.3 percent against the dollar since it
revalued the currency by 2.1 percent in July, even though in theory the yuan can
now rise or fall against the dollar by up to 0.3 percent each day.
China would widen the yuan's trading band at an appropriate time, Xiang said,
without saying whether he was referring to the closely watched yuan/dollar
trading band.
"The People's Bank of China will adjust the renminbi's floating band when the
time is appropriate, based on its consideration of the markets as well as the
economic and financial situation," he said.
In September the central bank said the yuan's trading band against the dollar
was appropriate, soon after it widened the yuan's daily trading band against
non-dollar currencies to 3 percent from 1.5 percent.
"We will manage and regulate the yuan exchange rate according to the maturity
of the markets and will make improvements towards a more flexible exchange rate
regime while keeping the yuan exchange rate basically stable at a rational and
balanced level," he said.
But Xiang stressed that the yuan exchange rate alone was not enough to
correct the imbalances in China's balance of payments, and called for greater
efforts to boost consumption and promote economic restructuring.
China "needs to continue adjusting economic policies and
spur consumption to have more balanced development in international
payments," Xiang said.
China revalued the yuan by 2.1 percent to 8.11 on July 21, scrapping a
decade-long peg to the dollar and putting the yuan under a managed float with
reference to a currency basket.
Xiang also repeated a pledge that the central bank would keep monetary policy
"basically" stable in 2006 by using monetary tools in a flexible way and improve
the yuan's mechanism.
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