Central bank: No timetable for yuan convertibility
(AP)
Updated: 2005-11-29 16:26

China's central bank has reiterated its lack of timetable for full convertibility of the yuan, a day after the US Treasury stopped just short of naming Beijing as a currency manipulator.

Although the keenly awaited US Treasury report did not give China the tag, which could have triggered sanctions by Washington, it said Beijing must take additional steps on the yuan so as to avoid the label in the future.

The China Securities Journal on Tuesday cited the central bank as saying that tecent reforms of China's foreign exchange regime were crucial towards the yuan's full convertibility.

However, the timing of such a move would depend on the status of China's ongoing economic development and the balance of payments position, the People's Bank of China (PBOC) said.

Reforms need to progress in a stable fashion, it added.

The comments apppeared directed at the US Treasury report.

US law mandates that the Treasury bi-annually assess the exchange rates of major trading partners so as to gauge whether they are unfair or not.

China was able to avoid being labeled a manipulator because of its "initial step" toward a floating currency system, Treasury Secretary John Snow said.

But Snow warned China that the United States expects further reform of China's foreign exchange regime "as quickly as possible."

China revalued its currency by 2.1 percent in July, placing it in a currency basket with major currencies such as the dollar, euro and yen, ending its decade-long peg to the dollar of 8.28 yuan.

The move succeeded in toning down criticism that China's currency was undervalued and unbalancing global trade but Washington, which expects a record trade deficit with Beijing this year, insists more must be done.

The PBOC went on to say that expectations for yuan appreciation remained steady given the possibility of hot money or fund inflows betting on an apppreciation move.

To prevent such inflows, the central bank said it would strengthen supervision over foreign currency, especially trade credits, the real estate sector and offshore accounts. It did not elaborate.

Only last week China's central bank had said expectations for a near-term appreciation of the currency were easing, with future indicators in the non-deliverable forwards (NDFs) markets pointing to a further weakening.

The yuan was trading around 8.08 to the dollar on the interbank foreign exchange market Tuesday, having appreciated steadily but very slowly from the rate of 8.11 set for the July revaluation.