Unstopped depreciation of Japanese yen will surely hurt the stability of Chinese RMB's exchange rate with the world hard currencies, and China hopes Japan Government take measures to halt the yen from a free falling, Dai Xianglong, governor of China's central bank, said in Beijing on Tuesday.
Speaking at a press conference arranged by the State Council Information Office, the senior banker said the yen has been devalued by at least 15 per cent since late last year, which "didn't help Japanese economy much, affected other Asian economies, and put great pressure on the Chinese RMB.”
Dai said that the falling trend of the yen, if not stopped immediately, will lead to devaluations of other Asian currencies on a wide range, and might force the People's Bank of China, the central bank, to devalue RMB in order to lessen export pressure. Dai said China has made its stance clear to the Japanese Government.
According to Dai, Japan is the world's second largest economy and has the ability to support a stable exchange rate. He said the United States kept its dollar strong even though its economy is “neither good.”
Meanwhile, Dai assured that China will improve foreign exchange administration and maintain a strong position in balance of payments and exchange rate stability.
The exchange rate formation mechanism will be improved while a stable exchange rate maintained, Dai said, noting that better management of current account will be accompanied by progress in capital account convertibility.
"We will promote international cooperation by working toward the completion of the currency swap arrangement with Japan, the Republic of Korea and ASEAN (the Association of South-East Asian Nations) countries aimed at financial stability in the region," he said.
Dai also announced that China's foreign exchange reserves reached US$212.2 billion at the end of 2001, representing an increase of US$46.6 billion, or up 28.14 percent, over that at the beginning of 2001.
(China Daily January 15, 2002)
