Market to decide yuan exchange rate
Updated: 2006-04-18 06:29
BEIJING - China will gradually move towards an exchange rate determined
to a larger extent by market forces, the nation's top forex official said in a
The remarks by Hu Xiaolian, head of the
State Administration of Foreign Exchange, came on the eve of the departure of
Chinese President Hu Jintao for a US visit expected to be dominated by trade and
Chinese President Hu
Jintao will travel to the United States this week aiming to build trust
and convince Washington that China's rise is not a threat.
"We will further improve the exchange rate mechanism, and incessantly make it
more responsive to market supply and demand," she said in an essay published in
Qiushi, one of the China's Communist Party's main theoretical journals.
Hu, also a vice governor of the central bank, said the surplus in
international payments, boosted by China's enormous trade surplus, made domestic
monetary policies more difficult.
"In recent years, the huge surplus in international payments as well as
excessive foreign exchange reserve growth has distorted domestic money supply,"
"This makes it harder for China to leverage its monetary policy tools and
jeopardizes the effect of macro-economic controls."
China's foreign exchange reserves, the world's largest, had hit 875.1 billion
dollars by the end of March, the central bank said last week.
US not expecting China forex change during Hu visit
The United States, which is pressing China to be more flexible on its
currency, is not expecting any single change in Beijing's policy during the
visit of Chinese President Hu Jintao this week, a senior U.S. administration
official said on Monday.
"We have said that the policy as articulated is a good one, but its
implementation has been much too slow," the official told reporters at the White
House on condition of anonymity. "I don't anticipate any one-off changes
occurring at the meeting, but it's an issue that is a priority for us."