China says limits on yuan-dollar to stay
Shanghai, September 26:
The Chinese yuan fell slightly against the US dollar today after Chinese officials rejected calls from Beijing’s trading partners for fester currency reforms during weekend G-7 meetings.
Chinese authorities also strongly suggested today that the narrow trading band governing the US dollar-yuan exchange rate’s daily movement would remain, despite a move on Friday to loosen controls on other currency rates. At midday, the yuan was trading at 8.0916 per US dollar, down from its Friday close of 8.0910.
Traders said the dollar gained as market participants interpreted the pressure from the Group of Seven (G7) industrialised states as not particularly intense. Many of China’s trading par-tners believe the yuan is undervalued, giving it an unfair trade advantage and would like to see it appreciate.
China revalued the yuan on July 21 to 8.11 yuan to the dollar from its decade-long rate of 8.27, an appreciation of 2.1 per cent. It also cut the yuan’s peg to the dollar, allowing it trade in a restricted float against a basket of currencies. In a small step toward greater foreign exchange flexibility, Chinese authorities decided to expa-nd the daily range the yuan could move against three cu-rrencies — the euro, yen and Hong Kong dollar — to three per cent above and below their opening levels from the previous 1.5 per cent band.