BEIJING -- China's currency, the yuan, is likely to stay on the
slow-appreciating track despite its recent sharp fall, a well-known Chinese
economist said Wednesday.
The yuan hit a new high last Thursday, but on Monday followed with its
sharpest fall -- 203 basis points -- since a revaluation reform was launched in
July last year. The official exchange rate on Wednesday was 7.9827 per US
dollar.
Zhang Liqun, a research fellow at the Development and Research Center of the
State Council, said, "Even if the yuan slips back temporarily, expectations
about its overall rise will not be altered."
Appreciation pressures on the yuan stem from China's huge trade surplus --
which hit a record 14.6 billion U.S dollars in July, a rise of 40.6 percent on
the same month last year -- and skyrocketing foreign exchange reserves, he said
in an interview with Xinhua.
His remarks were echoed by Ha Jiming, chief economist at the China
International Finance Corporation Limited, who predicted the yuan would
appreciate by 4 percent by the end of year, compared to its level prior to the
revaluation.
U.S. manufacturers argue the yuan is undervalued by as much as 40 percent,
making Chinese goods cheaper in the United States and American products more
expensive in China.
In July last year, the government allowed the yuan to appreciate by 2 percent
against the U.S. dollar and abandoned its peg to the dollar in favor of a
restricted float against a group of foreign currencies.
The yuan has since risen by 3.6 percent against the U.S. dollar.
It is allowed to move only within a 0.3 percent band against the greenback
per day, and Ha said the government-set range is expected to widen to 1 percent
by the end of the year.
The People's Bank of China, China's central bank, promised in a recent
monetary report that "market forces would play a bigger role in determining the
yuan's value, and that the currency would gradually be made more
flexible."
