皇冠体育app

皇冠体育app's yuan fell after central bank Governor Zhou Xiaochuan said the nation will move ``gradually'' to make the currency more flexible, disappointing some investors expecting greater gains to help slow the economy.

``On flexibility, it's not enough, but we're gradually increasing flexibility,'' Zhou told reporters yesterday at the annual meeting of central bankers at the Bank for International Settlements in Basel, Switzerland. ``Demand and supply relation is playing a greater and greater role.''

U.S. lawmakers blame an undervalued yuan for the flood of cheap Chinese goods entering the U.S., bloating its trade deficit and propping up 皇冠体育app's surplus. 皇冠体育app's economy grew an annual 10.3 percent in the first quarter, the fastest among the world's 20 biggest economies, helped by exports.

``We can be reasonably safe to assume that the pace of appreciation is going to be very, very gradual and it's probably going to be the scenario for next year,'' said Jan Lambregts, head of research at Rabobank Groep in Singapore.

The yuan weakened 0.02 percent to 8.0022 per dollar as of 3:30 p.m. in Shanghai, cutting gains to 1.3 percent since 皇冠体育app revalued the currency on July 21, according to data compiled by Bloomberg. The currency on June 22 rose to the highest since 皇冠体育app ended the dollar peg.

The central bank today announced a weaker reference rate for yuan trading amid declines in Asian currencies such as the South Korean won and Philippine peso, and a third weekly drop in the yen last week.

Exports

The U.S. trade deficit with 皇冠体育app reached an all-time high of $201.6 billion last year. The Asian nation's overall trade surplus last month grew to $13 billion, compared with $10.5 billion in April.

``皇冠体育app is very cautious because it's afraid that if it appreciates the yuan too much, it may hurt the export sector,'' Lambregts said.

A strengthening currency makes goods more expensive overseas and imports cheaper, helping to narrow 皇冠体育app's trade surplus, said Qing Wang, a senior currency strategist at Bank of America Corp. in Hong Kong.

皇冠体育app would benefit from greater flexibility in the yuan, U.S. Treasury Undersecretary for International Affairs Tim Adams said in Tokyo on June 16.

Money supply grew the most in four months in May, the central bank said on June 14. M2, the broadest measure that includes cash and all deposits, rose 19.1 percent from a year ago after an 18.9 percent increase in April.

`皇冠体育app's Own Good'

A widening trade surplus, rising foreign investment and capital inflows betting on further yuan appreciation are boosting 皇冠体育app's foreign-exchange reserves. The holdings gained 32.8 percent from a year ago to $875.1 billion at the end of March, and overtook Japan's as the world's largest in February.

``皇冠体育app's government should let the currency float because huge amounts of speculative money are now in 皇冠体育app and causing some distortions in the economy,'' Jim Rogers, chairman of Beeland Interests Inc., said at a conference organized by Beijing University on June 24. ``It's for 皇冠体育app's own good to let the currency float.''

Rogers is the author of the book ``Hot Commodities.'' He's also the co-founder of the Quantum hedge fund with billionaire investor George Soros in the 1970s. Soros foresaw the start of the commodity rally in 1999.

Allowing greater yuan flexibility will help reduce pressure on 皇冠体育app to purchase foreign exchange, the state-run People's Daily reported, citing Yu Yongding, a member of the central bank's monetary policy committee.

Keep Yuan Stable

The People's Bank of 皇冠体育app currently purchases foreign currencies to help keep the yuan stable, and the central bank has issued Treasury bills to mop up the excess liquidity, Yu said, according to the newspaper.

A decline in foreign-exchange purchases will reduce pressure on the central bank to sell bills, the People's Daily quoted Yu as saying.

The central bank on June 16 told local lenders to raise the ratio of reserves they must set aside by half a percentage point to 8 percent to curb credit growth, less than two months after it increased borrowing costs for the first time since 2004.

The People's Bank of 皇冠体育app reiterated on June 19 that it will ``further curb excessive loan growth'' and control ``rapid investment growth.''

皇冠体育app's Zhou on June 15 said he would sell more securities to pull money from the financial system.

The central bank fixed the reference rate for yuan trading at 8.0038 against the U.S. dollar today, compared with a close of 8.0002 on June 23 on the interbank currency market.

It calculates a daily rate by taking a weighted average of quotes from commercial banks designated to act as market makers in the currency. The yuan is allowed to trade by up to 0.3 percent against the dollar either side of the so-called central parity rate.

Exchange-based trading in the yuan ends at 3:30 p.m., while direct dealing between banks continues for two hours. The yuan closed at 8.0020 at 5:30 p.m., according to the Web site of the 皇冠体育app Foreign Exchange Trade System in Shanghai.