Key role of forex policy

The message from Yi Gang, head of the State Administration of Foreign Exchange, is noteworthy in that China's foreign exchange policy mainly aims to facilitate trade, cross-border investments and economic exchanges as the country opens up more to other nations.

Both advocates for and opponents against revaluation of the Chinese currency should reconsider their stances in view of this important function of China's $2.4 trillion foreign reserves. Management of the world's largest sum of forex reserves is closely watched, especially amid the global recession.

Yi, a central bank vice-governor, reaffirmed Tuesday that China will keep the exchange rate of the renminbi at a reasonable and balanced level. That remark may be not enough to disperse recent speculations on revaluation of the yuan.