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Governor: Yuan peg reform 'a slow business'
Updated: 2005-05-25 14:52

China's exchange rate reform is a "slow business," the nation's central bank governor said, in another signal that Beijing is not prepared to bow to foreign pressure on its currency.

China's exchange rate reform is a 'slow business', central bank head Zhou Xiaochuan said on May 24, 2005. [AFP]
"It's impossible that there'll be news in just one or two days," Zhou Xiaochuan said according to the state-run China Securities Journal. "Reform of the yuan exchange rate is a 'slow business'."

Zhou made the remarks at a forum in Beijing Tuesday as China remained under heavy criticism globally for sticking to an exchange rate that is seen as giving its exporters an unfair advantage.

The Chinese yuan has been pegged at around 8.28 to the US dollar for the past decade and has followed the American unit as it has fallen in value against major currencies such as the euro and the Japanese yen.

European Central Bank President Jean-Claude Trichet said Monday that several Asian currencies, and the Chinese yuan in particular, were undervalued compared to the euro and the dollar.

Zhou was also quoted in Wednesday's report as saying that any decision to adjust interest rates "depends on the country's inflation figures."

State media reported earlier this month that the central bank might further raise interest rates given the strong growth in China's April industrial ex-factory prices which indicated investment demand was still strong.

China's industrial ex-factory prices rose 5.8 percent year-on-year in April, 0.2 percentage points higher than the rate posted in both March and the first three months.

In October, China raised the lending rate in the local currency for the first time in nine years and in the months that have followed speculation has persisted about the need for further rate hikes.

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