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The new foreign exchange rate system has made it unnecessary for China to revalue the renminbi again, a senior central banker said yesterday in Beijing.
The currency's exchange rate is now decided with reference to a basket of currencies instead of being pegged to the US dollar.
"So there is no need to rely on administrative adjustment any more," said Ma Delun, assistant governor of the People's Bank of China, at the World Economic Forum's China Business Summit.
To help cushion the reform's impact on Chinese companies, the central bank has been using market-based operations to limit the rate's fluctuations in a thin band, said Ma, who served as a deputy director of the State Administration of Foreign Exchange until March.
By doing this, the central bank intends to allow a transitional period during which the firms learn to adapt to the new system.
But because the market is meant to play a major role in deciding the yuan's exchange rate after the reform, the rate should fluctuate in a wider range over time, Ma said.
He also said it is difficult to predict how long the transitional period will be.
The central bank raised the renminbi's value by 2 percent on July 21. On the same day, the central bank also announced the severance of the yuan's link to the US dollar.
(China Daily September 10, 2005)
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