China's central bank hit out on Friday at a report by a local newspaper suggesting the country could afford a much stronger yuan. The central bank "strongly condemned" a recent report in the China Business News that quoted an unnamed expert as saying the government had commissioned special teams to study yuan reforms before last July's 2.1 percent revaluation and that they had concluded China could withstand 5 percent appreciation a year.
"The report is purely fictitious," the People's Bank of China said in a statement posted on its Web site. The newspaper report, which was published on Thursday, was misleading and could create "abnormal market volatility", the central bank said. China's landmark currency reforms last year also replaced the yuan's decade-old peg to the dollar with a managed float.
The yuan has been gradually appreciating and on Friday reached 7.9705 per dollar, its highest level since the revaluation. "The reform of the yuan exchange rate mechanism was an important decision made by the Communist Party's central committee and the State Council based on China's own needs to reform and develop," the bank said in the statement.
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