July 23, 2010Central bank official suggests move away from dollar as benchmark
A top Chinese central bank official suggested switching away from the U.S. dollar as a benchmark for the yuan's foreign-exchange rate, switching instead to a basket of currencies, according to remarks published Thursday.
In comments posted to the People's Bank of China Web site, the central bank's Deputy Gov. Hu Xiaolian said using a basket of currencies from the nation's top trading partners would allow the Chinese yuan to better reflect trading fundamentals.
"Compared with pegging to a single currency, the exchange-rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner," she said.
China's central bank currently sets a "central parity rate" against the U.S. dollar each day, with that day's trading range confined to 0.5% above or below that level.
But Hu said focusing on the dollar-yuan rate ignored China's bigger trade picture.
"A floating exchange rate has impact on total imports and exports of an economy," she said.
"Therefore, the floating cannot be aimed to adjust [only the] bilateral trade balance, and it is not advisable to just look at the [dollar-yuan] exchange rate." See Hu's full comments in English on the People's Bank of China Web site
July 27, 2010
IMF says yuan 'substantially undervalued' - WSJ
The International Monetary Fund believes that the Chinese yuan is "substantially undervalued", the Wall Street Journal reported on Tuesday, citing two unidentified IMF officials.
The newspaper said the IMF's opinion, in a review of the world's third-largest economy, was backed by the United States, Germany, France and Britain among others.
A full analysis would likely be released in September unless China withholds its permission, it reported on its website http://www.wsj.com/.
A U.S. Treasury official also said on Monday that the yuan remained clearly undervalued and that the Treasury Department was closely monitoring it.
The yuan CNY=CFXS has risen 0.7 percent since the People's Bank of China announced its depegging from the dollar on June 19.
AP
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