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China's central bank Tuesday denied the possibility of further yuan appreciation after it allowed the currency to rise 2 percent in value against the US dollar a couple of days ago.
The 2 percent appreciation refers to an adjustment at the beginning of reform on the yuan's exchange rate determination mechanism, a spokesman for the People's Bank of China (PBC) said.
"It does not mean that there will be further revaluation (of the yuan) afterwards," the spokesman said in a statement.
It is an "important principle" for the yuan's reform to be conducted "step by step", which refers to the gradual process in the reform of the rate's determination mechanism, instead of its level, he acknowledged.
The spokesman said the 2 percent appreciation level was calculated out "on a rational equilibrium".
The increase basically caters to the need of materializing the overall balance in commodity and service trade as it was set in line with the extent of surpluses and structural adjustment in China's foreign trade, as well as the bearing capacity of domestic firms, he said.
Some developed countries, typically the United States, argued that the yuan was artificially low, giving Chinese exporters an "unfair" trade advantage.
Last week, China raised the value of yuan to a level of 8.11 per US dollar and scrapped the currency's peg to dollar, swinging to "referring to" an unrevealed market basket of currencies in setting the yuan's trading prices.
The PBC spokesman said a small number of overseas media made misunderstanding on China's exchange rate reform, especially the adjustment of the yuan's value against the dollar.
They even "wrongly" believe that the 2 percent appreciation of the yuan is just an initial adjustment, "which will trigger the expectation on further rate hikes," he said.
The media should keep a "responsible" attitude towards their reports and carry "objective" stories, the spokesman said.
(Xinhua News Agency July 25, 2005)
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