China to push forward exchange rate reform prudently

BEIJING - Chinese Premier Wen Jiabao said Sunday the country will push forward the yuan's exchange rate reform in a prudent and gradual manner to ensure social stability.

He reiterated the principle that China should reform its currency exchange mechanism independently, gradually and controllably, calling it a point of national sovereignty.

China would stick to the market-based, managed floating exchange rate regime, which was tied to a basket of foreign currencies, he said.

"The gradual advance of the RMB exchange rate reform and a more flexible exchange rate are necessary for our socialist development. However, we oppose politicization of the issue," he said.

Wen said that in terms of yuan's real value against the US dollar, it had gained 53 percent since the mid-1990s, and 22 percent since 2005 when China initiated its exchange rate reform. The RMB had advanced 3.7 percent since June last year when China resumed the reform.

Exchange rate reform should be considered in light of its impact on business performance and employment, he said.

The central parity rate was set at 6.5757 a US dollar on Feb 25.

source:Xinhua