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Oil price impact on China's economy 'limited'
Updated: 2005-10-20 13:22

Exchange rate to remain stable

China's currency exchange rate will remain stable for a period of time, Zheng said.

China announced its decision on Renminbi (RMB) exchange rate reform, introducing a floating width band of about 2 percent for the currency against a basket of foreign exchange on July 21 of this year, shortly after the NBS made public figures on performance of the national economy.

On July 21, the People's Bank of China, China's central bank, announced that China's currency, the RMB, will be traded at a rate of 8.11 to the US and the yuan to US dollar pegging system is switched to a basket of foreign currencies.

"That's a pure coincidence, and it won't occur this year," Zheng said.

The key to the exchange rate reform lies in the change of the forming mechanism of the rate, not simply the exchange rate itself, he said.

Chinese Premier Wen Jiabao said earlier this month that the reform of the RMB exchange rate is a process of gradual improvement.

He told Rodrigo Rato, Managing Director of the International Monetary Fund (IMF), that the most important thing at present is to deepen the results of the exchange rate reform and to improve services in relevant fields.

That includes improving the foreign exchange market and providing more financial services to enterprises to avoiding risks, improving the adjustment mechanism of the RMB exchange rate and intensifying supervision of cross-country capital flows to ensure the smooth operation of the new exchange rate mechanism, Wen said.

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