China's foreign exchange policy is in line with the pace of the country's
economic development and the daily floating band is enough to allow sufficient
appreciation of the RMB, according to Chinese economist Fan Gang.
Fan said that the major problem in the world capital market was the excessive
amount of U.S. dollars, which has led to its devaluation. Renminbi (RMB) appreciation not only helps strike out at
market speculations, but is also beneficial to maintaining a stable economy.
As the value of the RMB against the U.S. dollar hit a record high on Friday
with a central parity rate of 7.8185 yuan to one dollar, the Chinese currency
has risen by 3.73 percent since China's reform of the exchange rate system on
July 21, 2005.
Fan rejected comments that the daily 0.3 percent band from the official
central parity rate was not wide enough and insisted it did not need to be
At the first session of the China-France financial and economic forums in Beijing in September this year, Zhou Xiaochuan, governor of
the People's Bank of China, said there was no timetable for a further
widening of the daily floating band between the RMB and the U.S. dollar.
Fan Gang said that the current exchange rate is healthy and in line with the
economic conditions of the country.
As for China's one trillion yuan-plus foreign exchange reserve and the high
trade surplus which has caused deep concern around the world, Fan said that the
appreciation of the RMB alone could not solve the problems. China's external
economic balance is a complex issue, which needs the adjustment of the economic
structure and not just the appreciation of the RMB, he said.
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