The People's Bank of
China, the country's central bank, on Friday announced to raise
the float range of Renminbi exchange rate against non-US dollars
from previous 1.5 percent to 3 percent.
The bank, however, does not change the float range of Renminbi
exchange rate against US dollars in the inter-bank foreign exchange
market.
After China abruptly allowed its currency, the yuan, to
appreciate by a modest 2 percent on July 21, the trading price
between US dollars and yuan can be fluctuated within 0.3 percent in
the inter-bank foreign exchange market, and the trading price
between non-US dollars and yuan can be fluctuated within 1.5
percent.
According to a circular issued by the central bank recently on
the management of trading price in the inter-bank foreign exchange
market, the gap between the selling and purchase price of US
dollars in spot exchange cannot exceed 1 percent of the trading
middle price, and the gap between cash selling and purchase price
cannot exceed 4 percent of the trading middle price.
Banks can adjust the daily posted price of US dollars within the
regulated price range, according to the circular, which abolished
limit on the gap range concerning non-US dollar prices posted by
clients.
Banks can decide the prices between non-US dollars and Renminbi
by their own, according to the circular.
The above measures will help banks to enhance their capabilities
in deciding prices by their own, to manage price risks more
effectively, to provide better services for clients through fair
and orderly competitions, to manage and adjust yuan's exchange rate
on the basis of market supply and demand and with reference to a
basket of currencies, and to make full use of market in forming
exchange rates and avoiding risks, the central bank said.
Loosening the control over posted US dollar price gap will
increase the transaction cost of speculations and safeguard the
basic stabilization of yuan's exchange rate, the central bank
said.
The central bank and the State Administration of Foreign
Exchange will continue the reform of the RMB exchange rate regime
in an active, controllable and gradual way, so as to make the
exchange rate regime more flexible and maintain RMB exchange rate's
basic stability at a reasonable equilibrium, the central bank
said.
Facts show that the reform on the Chinese yuan exchange rate has
primarily reached the goal of building a more flexible RMB exchange
rate forming mechanism.
The trading price of China's currency, the RMB yuan, publicized
by the People's Bank of China Wednesday, closed at a rate of 8.0911
to the US dollar, 189 basic points higher than two months ago when
the reform on the yuan to US dollar pegging system was initially
launched.
(Xinhua News Agency September 24, 2005)
