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China lauds stable yuan since July revaluation
(Reuters)
Updated: 2005-09-18 20:34
China has been able to keep the yuan basically stable since its landmark July 21 revaluation, helped by low yuan interest rates, a senior central bank official said on Sunday.
"China has made detailed designs and arrangements in monetary policy," Yi Gang, assistant governor of the central People's Bank of China, told an economic forum.
"This means China has been able to keep the renminbi basically stable at a rational and balanced level."
He said recent steps to raise domestic dollar deposit rates, as well as low yuan interest rates, had helped take the heat off the currency, also known as the renminbi, or "people's currency".
There had been no surge in speculative capital inflows from overseas since the revaluation, one reason being the more attractive money market interest rates in the United States.
"If the renminbi appreciation is under 3 percent within a year, then people converting dollars to speculate on the renminbi will lose money," Yi said.
The yuan was revalued in July 21 by 2.1 percent to 8.11 to the dollar and had strengthened to 8.0871 as of mid-day on Friday.
Daily fluctuations are minute compared to fully liberalised currencies, but are larger than had ben allowed before the policy shift.
The modest changes are in keeping with Beijing's goal of keeping the currency "basically stable", a point repeated by Finance Minister Jin Renqing earlier this month.
Yi also said the government would speed up the development of the currency market to help companies hedge against exchange rate risk.
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