Nation says RMB not to float by big margin
(Xinhua)
Updated: 2005-07-22 06:56

Secondly, the international balance of payment will tend to balance basically with economic tools including the exchange rate playing a consolidated basic role in allocating resources, foreign exchange supply and demand being further streamlined and the adjustment mechanism of international balance of payment being improved. This will lay a solid basis for yuan's stability, the PBoC said.

Thirdly, China will actively coordinate macro-economic policies and steadily push for all kinds of reforms to provide a sound environment for the stability of its currency.

Finally, the PBoC itself will endeavor to enhance its fine-tuning ability, improve foreign exchange management and keep the yuan trading at a reasonable equilibrium, it said.

Some economists had argued that if the yuan is revalued just by a small margin, investors would bet on its further appreciation.

The central bank said Thursday the exchange rate reform is designed to cater to the need of alleviating foreign trade imbalances, stimulating domestic demand, sharpening the domestic enterprises' competitive edge globally and speeding up the country's reform and opening-up.

It cited that China's foreign exchange reserves skyrocketed to 711 billion dollars by the end of June on the back of its trade surpluses. China still exercises foreign exchange controls, which means that enterprises cannot keep all of their foreign currency earnings and that a large part of foreign exchange inflows will become the country's reserves.

Some developed countries, typically the United States, say that China artificially lowers the value of yuan, giving its exporters an "unfair" advantage and hurting the job markets in other countries. The yuan is pegged at around 8.28 to the US dollar since 1994.