China will maintain a stable monetary and yuan policy as it keeps a racing economy in check, state media on Monday quoted a senior central banker as saying, amid speculation Beijing could move any time to revalue the currency. But China should keep moving towards more market-oriented interest rates, the Securities Times quoted Wang Yu, secretary-general of the country's monetary policy committee, as saying.
The comments from Wang would seem to cool renewed speculation that Beijing is on the verge of revaluing the yuan.
"The central bank will henceforth do its best to protect the stability of the yuan's exchange rate, laying the foundations for future economic development," Wang was quoted as saying during a financial industry seminar in Beijing over the weekend.
The monetary policy committee is China's policy-making body on interest rates. It consists of finance ministry officials, industry executives and central bankers such as Wang, who became a member of the central bank's pivotal monetary policy department in late 2003.
China, the world's seventh-largest economy, raised interest rates for the first time in nine years last month, triggering talk Beijing may hasten steps to adopt a market-driven currency and unshackle the yuan, that has been pegged to the dollar at around 8.28 since the 1997/98 Asian financial crisis.
The rate hike was the latest salvo in a campaign to slow a racing economy, which had in turn worried Asian nations dependent on their giant neighbour for exports.
Economists now reckon a yuan shift could happen any time, since China had shown - via the rate hike - it was willing to let market forces steer the economy.
Separately, The China Securities Journal on Monday quoted an unnamed official from the country's forex watchdog as saying the country was deliberating various ways to adjust its exchange rate regime - a repeat of comments made previously.
Top officials have stepped up pledges to make the yuan more flexible, while stressing the need to head off volatility within a country that prizes stability.
Analysts say Beijing is keen to move to a more flexible yuan to better reflect economic conditions and the balance of payments. But policy makers argue a lot more work needs to be done to build a market-driven system.
Adding to the complexity, China has come under increasing international pressure from the West to free up the yuan. US exporters and policy makers have said China derives an unfair trade advantage from an undervalued currency.
Beijing, meanwhile, has pledged to make the yuan more flexible through reforms - but to do so in its own time and without bowing to pressure from outside.
The yuan, also known as the renminbi, was also coming under upward pressure from massive inflows of foreign currency, the China Securities Journal cited an official from the State Administration of Foreign Exchange as saying.
Comments
Comments are closed.