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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: RealMuLan who wrote (25574)	3/14/2005 10:40:41 AM
From: mishedlo	Read Replies (1) of 116555

China says yuan float range needs to be ´acceptable to all parties [Is China going to float the Yuan at a measured pace? - Mish] Monday, March 14, 2005 8:02:48 AM forexstreet.com China says yuan float range needs to be 'acceptable to all parties' BEIJING (AFX) - China needs to adopt a trading range for its currency that is acceptable to all affected parties, China Business quoted Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), as saying "We need to adopt a trading band which can be accepted by everyone," Guo said in an interview with the weekly newspaper He did not specify which interests needed to be addressed in any adjustment of the exchange rate The yuan now trades in a narrow band around 8.3 to one dollar but China has come under pressure from its major trading partners to make its foreign currency regime more flexible Guo also said that the government would not recklessly float the yuan "We must consider the ability of financial institutions, other companies and the nation as a whole in absorbing the impact (of a yuan revaluation)," he said When asked why there has not been any obvious progress in reforming the yuan exchange rate mechanism, Guo likened the government's preparatory work to preparing for a military campaign where "supplies, ammunition and troops are needed prior to any attack." He said the preparatory work is going well Guo reiterated the government will consider the country's economic development and foreign exchange market developments as well as the impact on the domestic financial system and on neighboring countries when reforming its yuan exchange rate system The SAFE director also said the government will keep an eye on potential capital outflows due to rising US interest rates, adding it will adjust its monetary policy when necessary He said such capital outflow risks are still small but the government should be prepared for any changes

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