China's Central Bank, The People's Bank of China, announced on Sunday that it has no plans to raise the float range of the Renminbi's rate of exchange against the US dollar.
After China allowed its currency, the yuan, to appreciate by a modest 2 percent on July 21, trading prices between US dollars and yuan has fluctuated within 0.3 percent on the inter-bank foreign exchange market, and within 1.5 percent against other currencies.
On Friday, the central bank announced in a circular that it would raise the float range of the Renminbi's rate of exchange against other currencies to 3 percent.
The float range against the US dollar, which now stands at 0.3 percent, is appropriate, said a spokesman with the central bank on Sunday.
In any case, the yuan's float range against other currencies has typically been higher than that against US dollars, the spokesman added.
Before exchange rate reforms were implemented, the exchange rate float range for the Renminbi against the euro was 10 percent; against the Japanese yen it was 1 percent.
The trading of US dollars plays a dominant role in China's inter-bank foreign exchange market, which has led to the narrower fluctuation range of the yuan's rate of exchange against the US dollar, the spokesman added.
Widening the float range against other currencies would help banks to prevent unnecessary losses, the spokesman said.
The above measure, among others, will help banks to enhance their capabilities in deciding prices, to manage price risks more effectively, to provide better services for clients through fair and orderly competition, to manage and adjust the yuan's exchange rate on the basis of market supply and demand and with reference to a basket of currencies, according to the circular.
(Xinhua News Agency September 26, 2005)
