Foreign Exchange News
- More flexible exchange rate expected
Date: 13-Mar-2007 Sources: (Shenzhen Daily)
CHINA will gradually increase exchange-rate flexibility and accelerate financial reforms, the central bank said in a statement at a press briefing in Beijing yesterday.
The comments came four days after U.S. Treasury Secretary Henry Paulson said the country's trade surpluses and exchange-rate regime are flooding the banking system with money, raising the risk of excess lending and bad loans.
The central bank has used interest rate increases, bill sales and requirements for banks to hold bigger reserves to rein in the supply of money, while resisting calls from the United States and Europe to let the yuan appreciate faster. China, the world's fourth-largest economy, expanded 10.7 percent in 2006, the fastest pace in 11 years.
The government is curbing investment and lending to stop accelerating inflation, asset bubbles in property and stocks and the construction of factories that may not be needed if the economy slows.
The government will strengthen controls on the money supply and maintain a stable monetary policy in 2007, the People's Bank of China said in the statement, ahead of a briefing by central bank governor Zhou Xiaochuan and Commerce Minister Bo Xilai.
The yuan has risen about 7 percent since a decade-long peg to the U.S. dollar was broken in 2005. The central bank set the reference rate for yuan trading at 7.7474 against the dollar yesterday.
The nation may introduce over-the-counter yuan derivatives and interbank yuan futures, the bank said. Reserve-ratio requirements will continue to be used to manage lending, the central bank added.
China will expand the scope of investments abroad, the central bank said.
Sponsor Results:
