China widens yuan trading limit

Updated: 2007-05-19 08:26

BEIJING - China took steps Friday to let its currency rise faster against the dollar, a move that would allow its currency to appreciate faster ahead of what are expected to be contentious talks in Washington on China's soaring trade surplus.

The Chinese central bank said that as of Saturday, the band in which the yuan is allowed to fluctuate against the dollar each day will be widened from 0.3 percent to 0.5 percent above or below the previous day's closing value.

But the bank cautioned that the change will not lead to "large appreciations" in the yuan's value.

"It does not mean that the RMB exchange rate will see large ups and downs, nor large appreciations," the bank's statement said, using another term for the yuan, the renminbi, or "people's money."

American officials hope a stronger yuan will help to narrow the multibillion-dollar U.S. trade deficit with China by making Chinese goods more expensive.

The announcement came ahead of a meeting starting Wednesday in Washington of a "strategic economic dialogue" between U.S. and Chinese senior officials that is meant to address complaints about China's trade gap, product piracy and other issues.

Critics of Beijing's trade policies say the Chinese government keeps the yuan undervalued, giving its exporters an unfair price advantage and adding to its swelling trade surplus.

Beijing revalued the yuan against the dollar by 2.1 percent in July 2005 and has let it rise another 5.3 percent since then.

But Washington was pressing for a faster rise, and some American lawmakers called for punitive action against China if it failed to take faster action on letting the yuan rise.

The central bank's announcement made no mention of the trade disputes. It said Beijing will "keep the exchange rate basically stable" in order to "safeguard stability of the overall economy."

Top China News  
Today's Top News  
Most Commented/Read Stories in 48 Hours