China's businesses should try to adapt to the market changes and
better manage the foreign currency risks as the country has push
forward market-oriented reforms on the exchange rate system, Wu
Xiaoling, the deputy governor of the People's Bank of China, said
on Friday.
"As the movement of foreign exchange rate to a large extent
reflects supply-demand changes in the market, the enterprises
should not care too much about whether the Yuan is revalued or
depreciated", Wu said at a summit forum on Development of
Enterprises in the Western Areas and Professional Managers held in
Lanzhou, capital of northwest China's Gansu Province.
"Instead, they should be clear of the fact that there are
inevitably risks hidden in the market and learn to better manage
these risks," said Wu.
Wu noted that China's economy is facing a lot of uncertainties
in the process of transition, and it is hard to say the Yuan will
definitely appreciate or depreciate.
China announced on July 21 last year to scrap the yuan's peg to
the US dollar, while linking it to a basket of currencies, and
allow the currency to float within a managed band.
The yuan has since gained roughly 3.5 percent, less than some
daily movements of the dollar or Euro, as it maintained its snail's
pace rise to hit a new high of 7.9897 to the dollar on July 21 this
year.
Wu said the input in terms of risk management is an integral
part of the company's operating cost. She suggested that the
businesses could mitigate risks by financial derivative
tools.
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(Xinhua News Agency August 5, 2006)