The central bank does not plan more abrupt changes in the yuan’s value, a senior People’s Bank of China official said, squelching speculation over further currency revaluations ahead of a meeting of top international finance officials later this week in China.
But the yuan on Monday climbed to its highest level since its July 21 revaluation as the comments by Ma Delun, a deputy governor of the People’s Bank of China, suggested authorities will let allow the yuan appreciate in the foreign exchange market.
“Right now we often hear corporates and all sorts of people all asking when is the next time the foreign exchange rate will be adjusted again,” Ma said, according to Monday’s issue of China Business News.
“I’d like to tell everyone, the next change in the (yuan exchange rate level) is happening everyday, every hour it is going on,” Ma said in a speech given over the weekend at a conference in the southern city of Shenzhen.
“The next adjustment will come in the foreign exchange market,” Ma said.
The yuan rose to 8.0954 to the dollar Monday, its highest close since July 21, when authorities revalued the currency at 8.11 yuan to the U.S. dollar, up about 2 percent from the previous rate of 8.27 yuan.
Last week, the yuan had gained amid speculation that a visit to the United States by Chinese President Hu Jintao early next month might prompt another revaluation.
The July 21 revaluation also cut the yuan’s decade-old peg to just the U.S. dollar, linking it instead to a basket of currencies of China’s main trading partners, including the U.S., Japan, the EU and South Korea.
But China still limits trading in the yuan and confines daily movements in the foreign exchange market within a 0.3 percent range of its opening level. Since the July 21 move, the yuan has appreciated by less than 0.2 percent against the dollar.
The central bank’s goal is to maintain stability, Ma added.
Adjustments in China’s foreign exchange policy will eventually give the market a much stronger sway over the yuan’s value, though they may at first be perceived as slow, the Financial Times quoted 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 was quoted as saying.
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.
Newly appointed U.S. Treasury Secretary for International Affairs Timothy Adams, who will attend the Dalian meeting, was expected to reiterate Washington’s desire for further revaluations.
Adams, who was confirmed by the Senate as the top official on international economic affairs on July 29, is due to meet with his Chinese counterpart Li Yong, a vice minister of finance, while in Dalian. But he said Washington would show patience.
“I also understand they have to manage expectations and speculative pressures,” Adams told Dow Jones Newswires in a briefing earlier this month.