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IMF: Widening RMB trading band not a 'baby step'

By Luo Lan (People's Daily Overseas Edition)

09:47, May 01, 2012

Edited and translated by People's Daily Online

China has long been criticized for being too slow in reforming its exchange rate regime, and certain people even described the country’s latest move to widen the RMB’s trading band against the U.S. dollar as "a baby step." However, the International Monetary Fund’s Managing Director Christine Lagarde obviously disagreed with that description, saying, “It is not a baby step. It is a very good step in the right direction.”

Exchange rate reform steadily accelerated

China has steadily accelerated its exchange rate reform since the mid-1990s. On Jan.1, 1994, China introduced a unified, managed, and market-based floating exchange rate system. On July 21, 2005, the country again improved the RMB exchange rate formation mechanism, and moved into a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The RMB’s daily trading band against the U.S. dollar was expanded from 0.3 percent to 0.5 percent in May 2007, and then to 1 percent on April 16, 2012.

A series of measures have strengthened the flexibility of the RMB exchange rate.

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Anthony at 2012-05-0199.251.111.*
The upward movement of the RMB is being wisely managed by China in the interests of stability.

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