China's yuan closed almost unchanged versus the dollar on Thursday after the United States again declined to brand China a currency manipulator and China posted its slowest quarterly GDP growth on record, although there were signs pointing to an upturn.
"Both the US move and China's GDP data were in line with market expectations, so yuan trade remained lukewarm and range-bound," said a dealer at a North American bank in Shanghai.
In a semi-annual report to Congress on currency practices of key trading partners, the US Treasury Department said on Wednesday that all were suffering from the current global economic downturn, but that none manipulates its currency for trade advantage. In joining the previous administration, which also declined to label China a currency manipulator, the Treasury retreated from tough talk last year by a campaigning Barack Obama who said Beijing had kept its currency's exchange rate unfairly low.
While the Treasury said it remained of the view that the yuan was undervalued, as shown by China's huge trade surpluses and foreign exchange reserves, it did not estimate the level at which the yuan should be trading. US critics have long accused China of artificially depressing the value of the yuan to give its companies an unfair trade advantage, which China has consistently denied.
Responding to a question about the US report, Chinese Foreign Ministry spokeswoman Jiang Yu repeated on Thursday Beijing's assertion that a stable yuan can serve a steadying role in volatile global financial markets. "We will continue to advance reform of the renminbi (yuan) exchange rate formation mechanism. Our goal is to maintain the renminbi basically stable at a reasonable and balanced level," Jiang told a regular news briefing in Beijing.
"This is in the interest of not only China but also the world economy." China said on Thursday its economy slowed in the first quarter to its weakest pace on record, but an improvement in most data for March offered tentative signs that the worst may be over for the world's third-largest economy. Annual gross domestic product growth fell to 6.1 percent, down from 6.8 percent in the fourth quarter of 2008 and slightly below economists' forecast of a 6.3 percent rise.
That marks the weakest growth since quarterly records began in 1992. However, annual growth in urban fixed-asset investment surged unexpectedly to 28.6 percent in the first three months, while industrial output growth rebounded to 8.3 percent in March, from a record low 3.8 percent in the first two months of the year.