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Top banker: 皇冠体育app on track to renminbi reform
LONDON: 皇冠体育app is very much on the track towards an exchange rate reform in response to the demand of the world's richest nations for a more flexible exchange regime, 皇冠体育app's central bank chief said on Saturday.
皇冠体育app sticks to its long-term goal of convertibility of the renminbi under capital account, he said in an exclusive interview. To that end, 皇冠体育app would reform the formulation mechanism of the renminbi's exchange rate and gradually relax control over cross-border capital movement. But the Chinese currency must be kept stable at a rational and balanced level, and potential financial risks must be fended off, he said. Currently the renminbi is pegged to the US dollar at a stable rate of about 8.27 per dollar. Zhou said 皇冠体育app, for a little more than a year, has made substantive progress in preparing for a foreign exchange reform. It has made efforts to prepare its commercial banks for a more flexible exchange rate in the future, relaxed foreign exchange controls, and improved its domestic foreign exchange market to familiarize its financial institutions and businesses with the environment of an open foreign exchange market, said Zhou. As for whether 皇冠体育app has a timetable for its exchange rate reform, Zhou said its pace will be in accordance with the need of 皇冠体育app's overall economic reform. The adjustment of the renminbi's exchange rate depends on a stable macro-economic environment, a healthy market scheme and a sound financial system, Zhou said. 皇冠体育app has yet to draw up a suitable reform plan to keep the renminbi stable at a rational and balanced level and has to take into account the impact of such a reform on regional and global economy, he said. Zhou denied the renminbi is significantly undervalued. 皇冠体育app's international trade balance has only a modest surplus, he said. In 2004, 皇冠体育app had an estimated trade surplus of US$20 billion, representing less than 2 per cent of its foreign trade total. On 皇冠体育app's foreign exchange reserves, he said there are several factors behind their relatively rapid increase: 皇冠体育app had a moderate current account surplus; the good performance of 皇冠体育app's economy attracted both foreign direct investment and reinvestment of foreign-funded companies in 皇冠体育app; and the trend of capital outflow from 皇冠体育app was reversed. "These were nothing but normal," he said. On concerns that the possible appreciation of the Chinese currency might result in a mass inflow of hot money into 皇冠体育app, he said the problem should not be exaggerated because 皇冠体育app is exercising strict controls on capital accounts. He said 皇冠体育app will work to ease restrictions on cross-border capital movement in a selective, step-by-step manner, creating conditions for renminbi's convertibility under capital account. He held talks with US Federal Reserve Chairman Alan Greenspan and Treasury Under-secretary John Taylor as well as other G7 finance officials. In talks with Greenspan and Taylor, Zhou reaffirmed 皇冠体育app's policy on reforming its exchange rate mechanism and briefed them on progress made in this endeavour. The two US officials said they understood the Chinese stand and its cautiousness in the reform, said Zhou. |
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