SHANGHAI, Oct 26 (AFP): China will not widen the yuan trading band against the US dollar this year and any future changes would be made in line with market developments, state press reported today.
"There is not much time left this year so a widening of the yuan/dollar daily trading just cannot happen now. The market would not be able to bear it," deputy central bank governor Wu Xiaolin was cited as saying by China Business News.
"Any decision to further widen the daily trading band will be based on how the market is responding (to the revaluation)," another newspaper, the China Securities News, quoted Wu as saying.
Wu was responding to comments this week by a central bank policy advisor, Yu Yongding, who suggested the current 0.3 per cent trading band be widened, the exchange rate calculation method revised and the dollar given less weight in the currency basket.
Yu, a senior economist and member of the monetary policy committee of the central bank, said China had no need to fear gradual appreciation of the yuan, which until recently was effectivly pegged to the US dollar.
"Yu said that as a scholar and it's his personal opinion which does not represent the view of the committee," Wu said in the Shanghai Securities News report.
"The appreciation of the yuan will be a long-term trend but that doesn't mean the exchange rate will see continuous hikes. (There will be) a lot of uncertainties along the way and the road will zig-zag," Wu added.
After heavy pressure from the United States and the European Union, China on July 21 allowed the yuan to float by placing it in currency basket but Washington is pressuring Beijing to go further. The authorities later widened the trading ranges for several currencies against the yuan but left the dollar band at 0.3 per cent either side. Since the Chinese currency was revalued by 2.1 per cent to 8.11 yuan to the dollar, it has strengthened by no more than 0.25 per cent. On Tuesday it closed at 8.0901 to the dollar.