Zhou: Yuan is 'in process of strengthening'
By Matthew Brockett and Simone Meier (Bloomberg)
Updated: 2006-09-11 06:59
Central bank governor Zhou Xiaochuan said the yuan is "in the process of
strengthening" as China allows greater flexibility in the currency's exchange
rate.
"We're steadily expanding the flexibility of our exchange rate," Zhou told
reporters today in Basel, Switzerland, where he's attending a meeting of central
bankers from the Group of 10 industrialized nations. "That's the policy, and I
think that's quite determined."
China is under pressure to let the yuan appreciate to help ease trade
imbalances with countries such as the U.S.
A stronger yuan will make Chinese goods more expensive abroad relative to its
major trading partners and help narrow the U.S. trade deficit.
The yuan last week reached its highest against the dollar since China ended
its peg to the U.S. currency in July 2005, after the central bank on Aug. 9 said
it would use exchange-rate policy to help cool export-led economic growth.
The yuan has gained 2 percent against the dollar since the People's Bank of
China ended the currency's peg to the dollar on July 21, 2005.
The currency was little changed at 7.9485 against the dollar as of 5 p.m. in
Shanghai, on Friday, Sept. 8, according to Bloomberg data. It reached 7.9334 on
Sept. 5.
Economic growth in China, the world's fourth-largest economy, accelerated to
11.3 percent in the second quarter from a year ago, compared with 10.2 percent
for the whole of 2005.
China will be "more proactive and progressive" in letting the market set the
currency's value, Finance Minister Jin Renqing said yesterday at a meeting of 21
Asia-Pacific finance ministers in the Vietnamese capital of Hanoi.
"We have given the market a more important role in deciding the exchange-rate
level and the market is playing a more important role already," Jin said.
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