Economy

China aims to make yuan convertible

(Xinhua)
Updated: 2010-07-31 01:27

BEIJING - The ultimate goal of China's exchange rate reform is to make the yuan a fully convertible currency, Yi Gang, head of the State Administration of Foreign Exchange (SAFE), said Friday.

Yi, also deputy governor of the People's Bank of China, the central bank, did not provide a timetable for the reform.

"There is no official timetable for a convertible yuan," he said in an interview with China Reform magazine posted on the SAFE website Friday.

He added that since China is a large country and its development is unbalanced, the issue becomes more complicated.

"Generally speaking, a convertible currency is one whose exchange rate can float freely," he said.

Asked whether the yuan may turn into a reserve currency, Yi said it depends upon the market demand.

"We should not push it hard. Do not be talked into the belief that the yuan is very close to a reserve currency. It, in fact, lags far behind that level," Yi said.

China abandoned a decade-old peg to the U.S. dollar five years ago by allowing its currency to fluctuate against a basket of currencies and appreciate by 2.1 percent.

Since then, the yuan has strengthened further, though slowly, and has risen more than 21 percent against the greenback.

On June 19 this year, the Chinese central bank announced that it would further the reform of the yuan exchange rate mechanism to improve its flexibility.