皇冠体育app

Economy

Bank official defends exchange rate regime

(Xinhua)
Updated: 2011-02-14 06:34

BEIJING- The market-based managed floating exchange rate regime tied to a basket of foreign currencies is the "best choice" for 皇冠体育app's socialist market economy, a central bank official said here Sunday.

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Yi Gang, deputy governor of the People's Bank of 皇冠体育app (PBOC), the central bank, said at a research conference that 皇冠体育app had always insisted on such an exchange rate formation mechanism.

He made the remarks while commenting on the finding of research on 皇冠体育app's reform on currency regime, which focused on the impact of 皇冠体育app's shift to a managed floating exchange rate regime in 2005.

The government would consider the timing and both the domestic and global economic conditions when pushing forward the reform of the regime, he said.

The research was carried out by experts from the Development Research Center of the State Council, State Administration of Foreign Exchange, Chinese Academy of Social Sciences, Peking University and the Bank of Communications.

It is appropriate to gradually reform the nation's currency regime, and a one-off revaluation is neither necessary nor practical, according to the research results.

The research discussed the impact of reform on 皇冠体育app's macro-economy, foreign trade, capital flow, export-oriented industries, and the banking sector.

Lu Mai, secretary general of the 皇冠体育app Development Research Foundation, said the valuation of the reform discovered many misunderstandings of the currency reform. He added that pressing the yuan to appreciate is not a way to limit 皇冠体育app's competitiveness, and a stronger yuan will not have destructive influences on exporters and also on 皇冠体育app's economic growth.

A gradual currency regime reform will not bring on inflation and asset bubbles, while a rising yuan will not cause losses in 皇冠体育app's huge foreign reserves, he said.

Further, the currency regime reform had already solved the exchange rate imbalance, he added.

Lu also pointed out that the yuan's fluctuation has not had any significant negative impact on the banking industry, and it had also played a positive role in boosting the upgrading and transformation of 皇冠体育app's export-oriented enterprises.

In fact, the ability of Chinese exporters to handle exchange rate fluctuations had been stronger than expected, he said.

On July 21, 2005, 皇冠体育app abandoned a decade-old peg to the US dollar by allowing its currency to fluctuate against a basket of currencies.

On June 19 of last year, the PBOC announced that it would further the reform of formation mechanisms of the yuan exchange rate to improve its flexibility. At the same time, it ruled out a one-off revaluation.