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China's yuan makes slow gains on the market
Updated: 2005-08-30 11:29

Last week, the yuan had gained amid some market speculation that a state visit to the United States by Chinese President Hu Jintao early September might prompt another revaluation.

China's central bank is now implementing a "managed floating system", in which the daily fluctuation ceiling and floor of the yuan movement in the foreign exchange market should not exceed a 0.3 percent of its opening level. Since the July 21 move, the yuan has gained 0.2 percent against the dollar.

The central bank's goal is to maintain basic yuan stability, Ma added.

Adjustments in China's foreign exchange policy will give the market a much stronger sway over the yuan's value, though the movement may at first be perceived as slow, the Financial Times quoted China's central bank governor Zhou Xiaochuan as saying.

Though the yuan's movement might seem small, "the important thing is that it has started to float and over time market forces will play a more and more important role," Zhou said.

Zhou said the central bank wants the yuan to move gradually to allow Chinese companies to adapt to the new trading system and to become familiar with financial instruments, such as forwards, used to hedge exchange rate risks.

The comments came as top finance officials from the so-called Group of 20 developing and industrialized nations prepared to meet Thursday in the northeastern Chinese port city of Dalian. China this year assumed the presidency of the G20, a group created in 1999 with the aim of reforming the global financial system to make financial crises less likely.

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