´One-off´ revaluation of Chinese yuan ´impossible´; no timetable
Tuesday, October 12, 2004 12:49:36 PM
afxpress.com
'One-off' revaluation of Chinese yuan 'impossible'; no timetable - SAFE BEIJING (AFX) - China's State Administration of Foreign Exchange (SAFE) has dismissed recent market rumors about an immediate revaluation of the yuan by reiterating its stance that no timetable exists to allow the currency to float freely and that a "one-off" revaluation of the currency is both "impossible" and "unwise." China's currency has been pegged at 8.3 yuan to the US dollar for the past 10 years. In a statement posted on SAFE's website, an unnamed spokesman was quoted as saying that recent market rumors about an immediate revaluation of the Chinese currency are "groundless and (a) misinterpretation of China's currency policy"
The spokesman did not elaborate about the source or details of the rumors, but reiterated the Chinese government's stance on the currency issue that a liberalization of the country's currency system "is a systematic project and should be carried out step by step instead of a one-leap approach"
"There is no specific timetable for it," the unnamed spokesman was quoted as saying, repeating the claim recently made by several Chinese government officials, including central bank Governor Zhou Xiaochuan
"It is impossible to revalue the Renminbi in a one-off manner, which is an unwise approach," he added
The spokesman also noted that a more flexible exchange regime, in the long run, could push the currency higher as well as lower due to changes in market expectations, so simply speculating on the currency's appreciation is "unwise" and "risky"
China has been facing increasing pressure from overseas to revalue its currency and has also seen increased calls from domestic academics, suggesting the revaluation of the yuan may be getting nearer
He Fan, a senior researcher of Chinese Academy of Social Science, a government's think-tank, was quoted by local media yesterday as saying that the right time to appreciate the yuan is approaching, as the interest rate gap with the US is narrowing and there is a trade deficit. He added that he expects the government to appreciate the yuan by around 10 pct. "People aren't expecting a yuan appreciation as the US Federal Reserve keeps on raising interest rates. Some hot money has already left the country and there was also a trade deficit in the first half of this year," He said
"The right time for revaluation is when people don't expect it," He said, adding that the government will likely revalue the yuan quickly to avoid speculation |
