BEIJING, Aug. 10 (Xinhuanet) -- Zhou Xiaochuan, governor of China's central bank, said for the first time on Wednesday that the US dollars, Euro, Japanese Yen and won of the Republic of Korea constitute the basket of the currencies that will act as a reference for the Renminbi exchange rate.
the remark when the central bank inaugurated its second headquarters in
Shanghai, the country's financial hub.
month, China abruptly allowed its currency, the yuan, to appreciate by a modest
2 percent, announcing the Renminbi will no longer be pegged to a single
currency, the US dollar, following the rate reform.
adjusted with reference to a basket of currencies, the mutual changes of major
currencies in the world market will reduce the yuan's fluctuation.
countries and regions and their currencies that take a comparatively major
position in China's foreign economic activities concerning foreign trade,
foreign debt and foreign direct investment will be taken into account when the
center bank adjusts the exchange rate of the Chinese yuan," he said.
will constitute the basket of the currencies and be weighted accordingly."
United States, European Union, Japan and the Republic of Korea are China's most
important trade partners, so their currencies naturally become the main
currencies in the basket," he said.
Singapore, Britain, Malaysia, Russia, Australia, Thailand and Canada
also have important roles in China's foreign trade, so their currencies are
important for the RMB exchange rate as well.
exchange rate, adjusted with reference to a basket of currencies, better
reflects the change of RMB value and China's foreign trade conditions in
general, which will be of great importance for the basic balance of goods and
service trade, he said.
not reveal the detailed contents of the currency baskets, including the shares
of each currency in deciding the yuan's value.
experts believe it is wise for the country not to publicize all the currencies
in the basket as well as their shares, which will help the central bank better
regulate and manage the exchange rate.
with a larger trade volume with China have a correspondingly larger share in the
RMB exchange rate regime, based on the reference to a basket of currencies will
better cope with the negative impact brought by the unstable US dollar, and
safeguard the stability of China's foreign trade environment, he said.
RMB exchange rate regime will discourage the speculative activities betting on
RMB's further appreciation, said Li Yang, director of the Financial Institute of
the Chinese Academy of Social Sciences.
Chinese yuan had been pegged to the US dollar at a stable rate of about 8.27 to
1 for years before the sudden appreciation last month.
devaluation of the US dollar in recent years, the RMB exchange rate against
other major currencies was actually dropping, which some foreigners claimed was
a measure by the Chinese government to stimulate its soaring exports.
leaders have said on several occasions that it is a complicated job to reform
the exchange rate regime, and should be done gradually.