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C. bank official: Reform key to Chinese currency
(Xinhua)
Updated: 2005-12-25 20:50
The central bank official interviewed by Xinhua said, "The point is that traders are expected to learn and take the foreign exchange fluctuation risks, financial institutions to provide more risk-control products especially derivative services, and the State Administration of Foreign Exchange (SAFE) to follow suit."
The People's Banks of China (PBoC), or the central bank, has stated it would widen the yuan floating band "at a proper time," and now China is letting the currency rise or fall by 0.3 percent a day against the U.S. dollar and a maximum of 3 percent against the euro and the yen.
Industry insiders speculate that the central bank may widen the yuan's fluctuation range against the U.S. dollar, for example, to 3 percent, the Shanghai Securities News reported.
"The timetable (of yuan reform) depends on the firms' endurability, the market's maturity and the regulator's ability," the central bank official said, however. "Therefore, China will take a 'walk-and-see' position instead of making any great leap forward."
He warned that the yuan, although witnessing ups twice as much as downs in trading days over the past five months, could go in another way -- to depreciate.
"The more foreign currencies come in, the more pressure on depreciation will be seen," he explained.
China's trade surplus swelled more than sevenfold to 80.4 billion U.S. dollars in the first 10 months of this year, rocketing from 11.1 billion dollars a year earlier.
Some developed countries, typically the United States, have been arguing that the yuan is too low in value, giving Chinese exporters an "unfair" advantage in trading activities and hurting job markets in other countries.
Although a report released by the U.S. commerce department in November admitted currency manipulation does not exist in China, some parliament members are still pressing China in this area.
"China began to consider the yuan reform as early as in 2001. Actually, it was the international speculation and pressure that delayed the process," the central bank said.
"Our foreign exchange reform is market-oriented and China will do it in an independent, controllable and progressive way without bowing to pressure from outside."
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