RMB will witness obvious appreciation trend in 2007, and is
likely to appreciate by large degree, said Yu Yongding, a member of
Chinese central bank's monetary policy committee.
The central government has been trying to avoid hurting export
firms too much by RMB exchange rates, but fluctuation of exchange
rates should abide by the reality, Yu said Friday at a forum on
foreign trade.
"We must implement contractive monetary policy to contain the
overheating investment," Yu said.
According to him, China's monetary policy was not tight enough
in the past months, which encouraged the investment growth. At
present, the ratio of China's investment to gross domestic product
has climbed to the world's record of 48.6 percent, and continue to
climb.
Short supply of RMB is another factor, he said. As a nation with
the largest foreign exchange reserve in the world, China is
increasing the issue of central bank bonds to restrain the rapid
growth of its basic currency, which will cause tight supply of
RMB.
The devaluation of?US dollar this year may also cause RMB
appreciation, he said. As RMB is linked to a basket of foreign
currencies, literally a change of any currency in the basket is
likely to bring a change in the rate of yuan to dollar and other
major currencies. Enditem
?
(Xinhua News Agency June 24, 2006)
