China's Central Bank, The People's Bank of
China, announced on Sunday that it has no plans to raise the
float range of the Renminbi's rate of exchange against the US
dollar.
After China allowed its currency, the yuan, to appreciate by a
modest 2 percent on July 21, trading prices between US dollars and
yuan has fluctuated within 0.3 percent on the inter-bank foreign
exchange market, and within 1.5 percent against other
currencies.
On Friday, the central bank announced in a circular that it
would raise the float range of the Renminbi's rate of exchange
against other currencies to 3 percent.
The float range against the US dollar, which now stands at 0.3
percent, is appropriate, said a spokesman with the central bank on
Sunday.
In any case, the yuan's float range against other currencies has
typically been higher than that against US dollars, the spokesman
added.
Before exchange rate reforms were implemented, the exchange rate
float range for the Renminbi against the euro was 10 percent;
against the Japanese yen it was 1 percent.
The trading of US dollars plays a dominant role in China's
inter-bank foreign exchange market, which has led to the narrower
fluctuation range of the yuan's rate of exchange against the US
dollar, the spokesman added.
Widening the float range against other currencies would help
banks to prevent unnecessary losses, the spokesman said.
The above measure, among others, will help banks to enhance
their capabilities in deciding prices, to manage price risks more
effectively, to provide better services for clients through fair
and orderly competition, to manage and adjust the yuan's exchange
rate on the basis of market supply and demand and with reference to
a basket of currencies, according to the circular.
(Xinhua News Agency September 26, 2005)