Yuan will be fully convertible by 2015

Updated: 2011-09-09 11:14


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Chinese officials told European Union business executives that the yuan will achieve "full convertibility" by 2015, Bloomberg quoted EU Chamber of Commerce in China President Davide Cucino as saying.

"We were told by those officials by 2015," Cucino was cited by Bloomberg as saying, declining to identify the government departments involved. People's Bank of China Governor Zhou Xiaochuan said that while there is no timetable for convertibility, the offshore yuan market is "developing faster than what we had imagined".

According to Bloomberg, China has accelerated the use of the yuan in international trade and investment to curb its reliance on the dollar. A fully convertible currency is one of the criteria the US and Europe are demanding from China as a condition for allowing it to be part of the International Monetary Fund's currency basket. A 2015 target would be a year faster than the schedule expected by 57 percent of 1,263 global investors in a Bloomberg survey published in May.

"Making the yuan fully convertible will lead to foreign inflows into China and a stronger yuan," said Sacha Tihanyi, a Hong Kong-based strategist at Scotia Capital. "Making the yuan fully convertible is also the key step in pushing it as a reserve currency and enhancing its use in global trade."

The yuan advanced 0.16 percent to 6.3840 per dollar as of 4:30 pm in Shanghai. The currency gained 6.4 percent in the past year and touched a 17-year high of 6.3705 on Aug 30. Its 0.9 percent advance in August was the biggest in 2011.

According to Bloomberg, the latest timeframe would be more aggressive than China's 12th Five-Year Plan (2011-2015) released in March, which said the nation was aiming at "gradually realizing the renminbi's convertibility under the capital account".

China "has no defined timetable for the yuan to be fully convertible," Bloomberg cited Zhou as saying. "It will be a gradual process." Zhou is in London for an official visit with Chinese Vice Premier Wang Qishan.