LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - Document
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
April 25, 2005 Monday
London Edition 1
SECTION: ASIA-PACIFIC; Pg. 12
LENGTH: 420 words
HEADLINE: Bank chief says China may speed currency revaluation RENMINBI:
BYLINE: By GEOFF DYER
DATELINE: BOAO
BODY:
China could accelerate plans to reform its controversial currency regime, because of mounting international pressure, the head of the country's central bank admitted at the weekend.
Zhou Xiaochuan, governor of the People's Bank of China, said the government was still working on the "sequencing" of a potential policy change, but acknowledged that encouragement from abroad could result in a quicker decision.
"If there is more pressure from outside, it may force us to speed up our reform," said Mr Zhou, speaking at the Boao Forum for Asia on Hainan, an island in southern China.
The pressure on China to let its currency rise against the US dollar has increased in the last week, after the US and several other members of the G7 group of leading industrial nations called for China to take immediate action on its foreign exchange policy.
The US Congress and European Union are examining possible tariffs or other restrictions on Chinese imports. Alan Greenspan, chairman of the US Federal Reserve, and John Snow, US Treasury secretary, said last week it was China's responsibility to act now.
Non-tradeable forward contracts based on the renminbi jumped sharply last week as investors expected Beijing to ease its dollar peg. The discount on one-year non-deliverable renminbi-dollar forwards widened 550 points on Friday and 950 points during the week to 4,600, the widest level since early January.
This implied that the market was betting on an exchange rate of Rmb7.818 to the dollar in 12 months' time. Although China has fixed its currency at around Rmb8.3 to the dollar for over a decade, the government has indicated for some time that it was preparing a shift in policy. China's sharply rising exports and foreign exchange reserves have prompted growing accusations that the currency is undervalued.
Mr Zhou stressed there was no timetable yet for a change in policy. "We have a very clear target in this regard, but we have our own sequence," he said. "We are doing some preparation, for example the reform of the financial sector, to enlarge the role of the foreign-exchange market." Another leading Chinese official at the conference said investors should not expect a large currency appreciation.
"You can't expect the renminbi to appreciate by 10 per cent tomorrow. It would be disastrous for China as well as to other countries," said Wei Benhua, deputy chief of the state administration of foreign exchange. "If we adjust a little bit it will not contribute a great deal to reducing the trade deficit with the US."
LOAD-DATE: April 24, 2005
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
April 25, 2005 Monday
London Edition 1
SECTION: ASIA-PACIFIC; Pg. 12
LENGTH: 420 words
HEADLINE: Bank chief says China may speed currency revaluation RENMINBI:
BYLINE: By GEOFF DYER
DATELINE: BOAO
BODY:
China could accelerate plans to reform its controversial currency regime, because of mounting international pressure, the head of the country's central bank admitted at the weekend.
Zhou Xiaochuan, governor of the People's Bank of China, said the government was still working on the "sequencing" of a potential policy change, but acknowledged that encouragement from abroad could result in a quicker decision.
"If there is more pressure from outside, it may force us to speed up our reform," said Mr Zhou, speaking at the Boao Forum for Asia on Hainan, an island in southern China.
The pressure on China to let its currency rise against the US dollar has increased in the last week, after the US and several other members of the G7 group of leading industrial nations called for China to take immediate action on its foreign exchange policy.
The US Congress and European Union are examining possible tariffs or other restrictions on Chinese imports. Alan Greenspan, chairman of the US Federal Reserve, and John Snow, US Treasury secretary, said last week it was China's responsibility to act now.
Non-tradeable forward contracts based on the renminbi jumped sharply last week as investors expected Beijing to ease its dollar peg. The discount on one-year non-deliverable renminbi-dollar forwards widened 550 points on Friday and 950 points during the week to 4,600, the widest level since early January.
This implied that the market was betting on an exchange rate of Rmb7.818 to the dollar in 12 months' time. Although China has fixed its currency at around Rmb8.3 to the dollar for over a decade, the government has indicated for some time that it was preparing a shift in policy. China's sharply rising exports and foreign exchange reserves have prompted growing accusations that the currency is undervalued.
Mr Zhou stressed there was no timetable yet for a change in policy. "We have a very clear target in this regard, but we have our own sequence," he said. "We are doing some preparation, for example the reform of the financial sector, to enlarge the role of the foreign-exchange market." Another leading Chinese official at the conference said investors should not expect a large currency appreciation.
"You can't expect the renminbi to appreciate by 10 per cent tomorrow. It would be disastrous for China as well as to other countries," said Wei Benhua, deputy chief of the state administration of foreign exchange. "If we adjust a little bit it will not contribute a great deal to reducing the trade deficit with the US."
LOAD-DATE: April 24, 2005
posted by Eastlaw at 2:04 AM
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