NBS: No one-off RMB appreciation
(AFP)
Updated: 2006-07-18 19:53
They said the data was expected to increase pressure on China to revalue the
yuan as part of efforts to better balance the economy and reduce its dependence
for growth on exports.
In July last year, the government, under pressure from its trade partners led
by the United States, revalued the yuan by 2.1 percent against the dollar and
allowed it to trade within set bands against the US and other currencies.
Despite the United States saying the yuan is still being artificially kept
too low, China has maintained the current forex regime is appropriate to its
stage of development and that it will pursue gradual reform.
Zheng, the NBS spokesman, on Tuesday again defended the system.
"It has come to play a positive role and has been welcomed and met with a
positive appraisal from the international community," he told a briefing in
Beijing.
While no drastic adjustment was expected, analysts argued that some sort of
change was needed to re-balance the Chinese economy and wean it off its reliance
on exports and investment.
"China urgently needs to rebalance the economy, cooling down investment and
relying less on exports and more on domestic consumption," said Robert
Subbaraman, a Tokyo-based economist with Lehman Brothers.
Hong Liang, an economist with Goldman Sachs (Asia) in Hong Kong, said the
yuan would appreciate in the second half, expecting its daily dollar trading
band to widen from its current 0.3 percent to around one percent.
"Following a weaker US dollar, the yuan has depreciated on trade-weighted
terms since late last year, adding further fuel to export strength and diluting
the impact of monetary tightening (made in April)," she said.
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