Move to cool hot money

Wider range for yuan's fluctuation against the US dollar will deter destabilizing speculation in exchange market

From Monday, the yuan's exchange rate fluctuation against the US dollar was expanded from 1 percent to 2 percent above or below the daily midpoint the central bank sets in the interbank spot foreign exchange market.

This will enhance the floating flexibility of the yuan and improve the efficiency of capital allocation, facilitating economic restructuring and strengthening the role of the market in allocating resources, and will not lead to a sharp depreciation, because of the improving balance of payments and foreign exchange deposits, China's central bank said.