BEIJING, Aug. 30 -- China's central bank ruled out any more abrupt ups and downs in the value of its currency, the yuan, pouring cool water on further currency speculations.

A Chinese woman walks past a poster advertising a foreign exchange business at a bank in Shanghai August 11, 2005. China's yuan strengthened further to a new post-revaluation high versus the dollar on Thursday, a day after the central bank revealed the foreign currencies in its reference basket. [Reuters]

    The yuan, also called Renminbi, on Monday climbed to its highest level since its July 21 revaluation, as the comments by Ma Delun, a deputy governor of the People's Bank of China, suggested Beijing banking authorities will allow the yuan appreciate in the foreign exchange market in Shanghai.

    "Right now we often hear corporates and all sorts of people asking when is the next time the foreign exchange rate will be adjusted," Ma said.

    "I'd like to tell everyone, the next change in the yuan exchange rate is now happening everyday, every hour the changes are happening," Ma said in a speech given over the weekend at a conference in the southern Chinese city of Shenzhen.

    The yuan rose to 8.0954 to the U.S. dollar on Monday, its highest close since July 21, when the People¡¯s Bank of China revalued the currency at 8.11 yuan to the U.S. Dollar, up about 2.1 percent from the previous rate of 8.28 yuan. The July 21 revaluation also cut the yuan's decade-old peg to the U.S. dollar, linking it instead to a basket of currencies of China's main trading partners, including the U.S., Japan, the EU and South Korea.

    Last week, the yuan had gained amid some market speculation that a state visit to the United States by Chinese President Hu Jintao early September might prompt another revaluation.

    China's central bank is now implementing a "managed floating system", in which the daily fluctuation ceiling and floor of the yuan movement in the foreign exchange market should not exceed a 0.3 percent of its opening level. Since the July 21 move, the yuan has gained 0.2 percent against the dollar.

    The central bank's goal is to maintain basic yuan stability, Ma added.

    Adjustments in China's foreign exchange policy will give the market a much stronger sway over the yuan's value, though the movement may at first be perceived as slow, the Financial Times quoted China's central bank governor Zhou Xiaochuan as saying.

    Though the yuan's movement might seem small, "the important thing is that it has started to float and over time market forces will play a more and more important role," Zhou said.

    Zhou said the central bank wants the yuan to move gradually to allow Chinese companies to adapt to the new trading system and to become familiar with financial instruments, such as forwards, used to hedge exchange rate risks.

    The comments came as top finance officials from the so-called Group of 20 developing and industrialized nations prepared to meet Thursday in the northeastern Chinese port city of Dalian. China this year assumed the presidency of the G20, a group created in 1999 with the aim of reforming the global financial system to make financial crises less likely.

    (Source: chinadaily.com.cn/Agencies)