China will continue to gradually increase the flexibility of the
RMB exchange rate, said Zhou Xiaochuan, governor of the People's
Bank of China,?on Sunday.
In a cabinet work report delivered at the just-opened annual
parliament session on Sunday morning, Chinese Premier Wen Jiabao
said China will "improve the system of managed floating foreign
currency exchange rates and keep the RMB exchange rate basically
stable at an appropriate and balanced level."
"What the premier said means that China would continue to
increase the flexibility of the RMB exchange rate in a gradual
manner," Zhou told Xinhua after the opening session.
The central bank governor said judging from the current stage of
the RMB exchange rate reform and the exchange rates fluctuations in
the international market, the present floating scope of the RMB
exchange rate is "adequate."
Currently the Chinese central bank sets a daily central parity
rate for the RMB yuan against U.S. dollar and allows the currency
to trade within 0.3 percent around that level.
"This floating range can be expanded in terms of the future
development, but it has to be based on the actual situation both at
home and internationally," said Zhou.
The governor declined to answer the question whether China would
adjust the floating scope of the RMB exchange rate before Chinese
President Hu Jintao's visit to the United States, scheduled for
April.
China revalued the yuan by 2.1 percent against the dollar on
July 21 last year and dropped the 11-year peg to the U.S. unit in
favor of a link to a basket of currencies. Currently the RMB
exchange rate stands at 8.0380 yuan against one dollar, 2.88
percent dearer than last July.
Nevertheless, Washington has kept pressuring Beijing to take
bigger steps in raising the flexibility of the RMB exchange
rate.
(Xinhua News Agency March 5, 2006)