No basis for big yuan rise: China central banker

SHANGHAI (BestGrowthStock) – There is no basis for major appreciation of the yuan, given China’s shrinking trade surplus, although the country’s latest yuan policy will help to restructure its economy in the long run, a senior central banker said on Friday.

Xie Duo, head of the financial market department of the People’s Bank of China, added that although Beijing’s move last weekend to end the yuan’s two-year peg to the dollar had supported the global commodities markets, the impact on those markets should be limited.

He added that the international monetary system needed to be reformed in order to solve global economic imbalances, and that adjusting currency exchange rates alone would not be sufficient.

“You cannot depend only on the dollar and the euro to solve economic imbalances,” he told a financial conference in Shanghai.

China’s decision to allow more flexibility in the yuan, seen in part as a move to defuse likely criticism at the upcoming Group of 20 summit about its currency policy, sparked a 0.5 percent rise in the currency this week to its highest since it was revalued five years ago.

Xie said the yuan reform showed that China was more confident about managing its economy in the wake of the global financial crisis.

With the yuan now floating against a diverse basket of currencies, he added, market forces would play a bigger role in determining its value.

U.S. President Barack Obama welcomed China’s new policy, but said on Thursday it was too early to tell if the yuan’s rise would be enough to help rebalance world growth.

Stock Market Today

($1=6.83 Yuan)

(Reporting by Samuel Shen and Chen Aizhu; Editing by Edmund Klamann)

No basis for big yuan rise: China central banker