Home>News Center>China
       
 

Central bank to take safe approach on currency peg
(Agencies)
Updated: 2004-11-07 09:32

China's central bank said it would take a "gradual and safe" approach to loosening the yuan-dollar peg, following International Monetary Fund calls to let the currency float in a wider margin.


A Bank of China employee counts five-yuan bank notes in Beijing. China's central bank said it would take a "gradual and safe" approach to loosening the yuan-dollar peg, following International Monetary Fund calls to let the currency float in a wider margin. [AFP]
A spokesman for the People's Bank of China quoted by the Jinrong Shibao financial daily on Saturday said China would phase in moves to make the currency exchange rate more flexible.

The yuan is currently pegged in a narrow margin around 8.27 to the dollar under a regime enforced by the People's Bank of China. The spokesman said any moves to loosen the peg would be complex and would need to take many factors into consideration.

The bank would "adopt various measures to promote this reform gradually and safely," he said.

The bank's comments followed publication of an IMF report in Washington on Friday following meetings held with Chinese authorities in May.

The report said China was concerned that moves to relax the yuan-dollar peg could spark a speculative wave forcing the yuan higher.

"While acknowledging the need eventually for increased exchange rate flexibility, the (Chinese) authorities have strong reservations about making an initial move in present circumstances," the IMF staff said.

"In particular, they were concerned that a small initial move could exacerbate capital inflows."

The statement appeared to reflect a concern that many overseas investors believe the yuan is undervalued.

However IMF staff said they were not convinced that the yuan was "substantially undervalued" and suggested that "a larger initial move would be necessary" if sizeable speculative capital inflows were to continue.



 
  Today's Top News     Top China News
 

Nation likely to be 3rd largest trading power

 

   
 

Nutritional imbalance plagues people

 

   
 

Mine blast kills 33, injures 6 in Henan

 

   
 

Coal mining: Most deadly job in China

 

   
 

Shen and Zhao win Cup of China

 

   
 

Consumer price remains stable in October

 

   
  Hu pledges strategic partnership with Brazil
   
  Coal mining: Most deadly job in China
   
  Mine blast kills 33, injures 6 in Henan
   
  Consumer price remains stable in October
   
  Work on anti-trust legislation stepped up
   
  Wen: Nation strengthens ties with Luxembourg
   
 
  Go to Another Section  
 
 
  Story Tools  
   
  Related Stories  
   
China to discuss currency policy with G-7 nations
  News Talk  
  It is time to prepare for Beijing - 2008  
Advertisement