Latest News:  
Beijing   Sunny    26 / 12 ℃  City Forecast

People's Daily Online>>China Business

Yuan gets more room to float

By Wang Xiaotian (China Daily)

09:30, April 15, 2012

China's announcement on Saturday to enlarge the floating band of the yuan's trading price against the US dollar was viewed as a breakthrough in the process of forming its market-based currency exchange rate.

The People's Bank of China, the country's central bank, said in a statement published on its official website that the floating band in the inter-bank spot foreign exchange market will be enlarged from 0.5 percent to 1 percent effective April 16.

To keep the exchange rate stable, the PBOC has set a daily reference rate for the yuan and it will be allowed to fluctuate only to the daily limit on either side of the reference rate. The trading range was widened to 0.5 percent from 0.3 percent in May 2007.

It also raised the spread between dollar selling and buying prices offered by the foreign exchange-designated banks to their customers to 2 percent of the reference rate, from the current level of 1 percent.

The PBOC said the move is to "meet market demands, promote price discovery, enhance the flexibility of the yuan exchange rate in both directions, and further improve the managed floating yuan exchange rate regime based on market supply and demand with reference to a basket of currencies."

In the future it will keep the currency basically stable at an "adaptive" and "equilibrium" level to preserve stability in the Chinese economy and financial markets, the bank said.

Cao Yuanzheng, chief economist of the Bank of China Ltd, said earlier that a daily limit of 1 percent is more appropriate and in line with international conventions, and a wider trading range will help to form a market-based exchange rate by encouraging more market hedge behavior.

The move fell within market expectations and now is a good time to expand the spread, said Wang Tao, head of China economic research at UBS Securities Co Ltd.

【1】 【2】

Email|Print|Comments(Editor:雪萌)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Yushu holds meeting of reconstruction work

  2. Centenary birth of Kim Il Sung celebrated

  3. PLA submarine chaser group in attack-and-defense drill

  4. Eight lamas awarded highest academic degree

Most Popular

Opinions

  1. Security cooperation is SCO's shining point
  2. Syria ceasefire is not negotiable
  3. Freedom of speech does not protect rumors
  4. China's state-owned firms not 'non-market' entity
  5. China should be patient during peaceful rise
  6. Respond calmly to 'China threat theory'
  7. Why are Chinese goods more cheap abroad?
  8. Hold mainstream of China-ASEAN relations
  9. Asia-Pacific countries should promote free trade
  10. Anelka cannot save Chinese football

What's happening in China

Online shopping gaining popularity

  1. Suspected killer of five apprehended in E. China
  2. TV services reach China's remote rural regions
  3. China launches oil spill response vessels
  4. Storm delays flights in south China
  5. 1st Confucius Institute in N. Ireland opens its doors

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai