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2011-1-17
China will increase the flexibility of the yuan exchange rate and further push forward the opening-up of its financial markets, a senior central bank official said Friday.
China will continue the reform of the yuan exchange rate mechanism and keep the rate basically stable at a reasonable and balanced level, Li Dongrong, assistant governor of the People's Bank of China, said at a forum. The speech was posted on the central bank's website.
The Chinese yuan strengthened to a record high against the U.S. dollar Friday, the central parity rate reaching 6.5896, the second straight day it has been set below 6.6 per dollar, according to the China Foreign Exchange Trading System.
The currency has risen by more than 3 percent since the country's central bank announced in June 2010 it would further reform the yuan exchange rate formation mechanism to improve its flexibility.
Li also said the central bank will work to expand trials of cross-border yuan settlement, to facilitate trade and investment.
The central bank will promote the policy of allowing exporters to park their foreign revenue overseas, Li said, adding that it will further develop the foreign reserves market and create tools to hedge exchange rate risk.
Li's speech came after the central bank announced Thursday the nation's qualified businesses and banks may settle their overseas direct investment in yuan, a move that expands the Chinese currency's global reach and eases excess domestic liquidity concerns.
Li also voiced concern about loose credit globally, saying such policies are adding to capital-inflow and currency-appreciation pressures, leading to asset bubbles in some emerging economies.
China still faces many challenges, Li said. "Expectations for inflation are rising. Housing prices are still high in some cities. Pressure from continuous inflows of foreign capital is increasingly evident," he said.
The central bank will soundly manage money supply and maintain reasonable growth in credit, he added.
source:Xinhua
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