Economy

RMB exchange rate regime reform tailored to China

(Xinhua)
Updated: 2010-06-27 13:42

TORONTO - Further RMB exchange rate regime reform can help China work very closely with its economic partners on the long term for mutual benefit and further development, a senior official of the People's Bank of China said here Saturday.    

"Now China is reforming its RMB exchange rate regime and further improving its managed floating RMB exchange rate system," said Zhang Tao, International Department director with the central bank of China, at a media briefing at the start of G20 Summit.    

This is tailored to China's national conditions and is China's national strategy on development, said the official.    

The reform of RMB exchange rate regime will help China restructure its economy and promote all-around sustainable and balanced growth, added Zhang.  

"In doing so, we can guide resources and better float to the services sector and boost our internal demand, to promote the industrial upgrade and the transformation of the economic growth pattern," he said.    

Zhang also mentioned reform of RMB exchange rate regime can reign inflation asset bubbles.    

The central bank of China recently declared to further the reform of exchange rate regime and make its currency more  flexible. This was welcomed by lots of wealthy and emerging  nations and international organizations such as International Monetary Fund (IMF).    

Starting from July 2005, China has moved into a managed floating exchange rate regime based on market supply and demand  with reference to a basket of currencies.    

In 2008, when the financial crisis was at its worst, the exchange rate of a number of sovereign currencies to the U.S. dollars depreciated by varying margins.

However, the Chinese Yuan kept stable. The stability of the RMB exchange rate has played a significant role in mitigating the crisis' impact and promoting global rebalancing.