Economy

China: No one-off move in exchange rate reform

(Xinhua)
Updated: 2010-06-20 19:21

BEIJING - The People's Bank of China (PBOC) said Sunday it will not conduct a one-off revaluation of the RMB (yuan) exchange rate.

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The PBOC said it will keep the yuan basically stable at a reasonable and balanced level and manage and adjust the RMB exchange rate based on the floating bands previously announced in the interbank foreign exchange market, a statement posted on its website said.

The PBOC aims to promote China's balance of international payments while safeguarding the stability of the nation's macro economy and financial markets, the statement said.

The statement came one day after the PBOC announced it would further promote the reform of the RMB (yuan) exchange rate regime and increase the flexibility of the RMB exchange rate.

The move is in line with China's long-term fundamental interests, as it is conducive to advancing the structural adjustments which will lead to a comprehensive, balanced and sustainable growth.

The floating currency exchange rate will help guide resources to the service industries, which will help upgrade the industry while reducing the nation's trade imbalance and its reliance on exports, the statement said.

The statement also said a flexible currency exchange rate regime will help curb inflation and asset bubbles and create a more favorable international development environment for China.

Sunday's statement emphasized the yuan be pegged to a basket of currencies given its close ties with a number of trade partners, adding that the US dollar should not be the only gauge for judging the RMB exchange rate level.

Trade between China and the European Union in the first five months of the year accounted for 16.3 percent of China's total foreign trade volume, while the trade between the country and the United States, the Association of Southeast Asian Nations (ASEAN), and Japan accounted for 12.9 percent, 10.1 percent and 9.4 percent, respectively, according to the statement.