Banker: No official adjustment of yuan rate
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.
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.
A currency trader counts yuan banknotes in Beijing in this undated photo. [AFP]
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.