Premier Wen Jiabao ruled out a further one-off revaluation of the local
currency yesterday, but said efforts will be made to have more flexibility in
the exchange-rate regime.
"There won't be any more one-off administrative move on renminbi appreciation
or depreciation; or any surprise move," Wen told a press conference yesterday.
"We have established a new renminbi exchange-rate regime and we will further
build this system and strengthen it," he said.
"We will expand the foreign exchange market and allow more flexibility and
fluctuation of the Chinese currency."
China surprised the market last July when it reformed a decade-old
exchange-rate regime, allowing the renminbi to appreciate by 2 per cent against
the US dollar and linking it to a basket of currencies instead of the greenback
alone.
But it still faces international pressure to let the renminbi appreciate
further, although Chinese officials have been reiterating that the exchange-rate
regime will be more flexible.
The authorities have been accelerating the building of a more mature foreign
exchange market by introducing derivatives such as forwards and swaps.
On the back of a hefty surplus, China's forex reserves rose 34.3 per cent on
a year-on-year basis to US$818.9 billion at the end of last year, which was 17
percentage points slower than a year earlier.
Economists have said that China's export competitiveness is derived from
factors such as low labour costs, rather than the exchange rate.
(China Daily 03/15/2006 page1)