China: No timetable on yuan moves

Reuters via CNN.com

Chinese authorities have again declined to set out a timetable to make their currency more flexible on the world’s money markets and said they had not come under international pressure to revalue the yuan.

Major nations and especially the United States have repeatedly urged China to allow its currency to rise and the Chinese foreign exchange regime was also in focus at the Group of Seven meeting.

‘We are determined to move towards a flexible exchange rate, but no timetable,’ Chinese central bank deputy governor Li Ruogu told reporters on Saturday.

When asked if China will widen the currency band or swap the peg for a currency basket, Li said : ‘We will do whatever I think is possible.’

The yuan has been pegged at about 8.28 to the dollar since the mid 1990s and critics argue this is to low and gives Chinese exports an unfair competitive advantage.

China has countered that it will move to a more flexible currency regime at some stage but only when it has reformed its shaky financial system, a pledge repeated again at the G7 meeting of finance ministers in London.

China has already relaxed some curbs on foreign exchange transactions, including allowing some service firms to retain more foreign exchange earnings, and made it much easier for multinationals to deal in hard currency.

The central bank has pledged to push ahead with currency, interest rate and banking reform in 2005, but repeated its policy of keeping the yuan ‘basically stable.’

The World Bank in its quarterly report on China released on Friday said China’s economy is showing signs of cooling, but acceleration risks remain and Beijing should be ready to raise interest rates again if needed.

China’s central bank governor said on Friday he expected the Chinese economy to grow by between eight and nine percent in 2005. Economic growth in 2004 was 9.5 percent.

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