Premier says yuan's trading band to widen gradually
(AP)
Updated: 2006-09-06 16:36
Shanghai - China plans no "surprise adjustment" in
its currency's exchange rate, Premier Wen Jiabao said, saying Beijing's
policy is to gradually adjust the yuan regime.
Wen's comments, posted on the Foreign Ministry's Web site
Wednesday, come amid speculation that Beijing will relax those controls in the
face of mounting pressure from the US and other trading partners for the value
of the yuan, also known as the renminbi or "people's money," to rise.
"The floating of the renminbi exchange rate will be mainly
determined by market supply and demand and its flexibility will be increased
gradually," Wen said. "So there will be no 'surprise' adjustment in the renminbi
exchange rate."
Wen's remarks were posted in a transcript of an interview
with European journalists before his departure for a tour that will take him to
Finland, Britain, Germany and Tajikistan.
China limits daily changes in the yuan's value to 0.3
percent above or below a daily rate set each morning by the central bank, or
People's Bank of China. Daily fluctuations have generally been within an even
narrower band, although they recently have come close to the daily limit.
The yuan's value has risen by about 2 percent since
July 21, 2005, when Beijing revalued the currency by 2.1 percent and revised its
trading system to link the yuan's value to a basket of major currencies instead
of just the US dollar.
For the previous 11 years,
the yuan traded at about 8.28 yuan. China's developing financial markets require
a relatively stable currency.
China's currency
policy is expected to come up during several international financial meetings in
the next few weeks and during a visit by US Treasury Secretary Henry Paulson to
China later this month.
The administration of
George W. Bush is facing increasing election-year pressure from Congress to
narrow the trade deficit with China, which rose to a record US$202 billion last
year, and protect American jobs.
A rise in the
yuan's value theoretically would make US exports cheaper for Chinese consumers
and Chinese products more expensive for Americans.
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