China Says It Will Not Bow to Foreign Pressure on the Yuan
http://enews.voanews.com/t?ctl=D6C519:2F72C9DUS, other Western countries say that makes Chinese products unfairly
cheap, causing huge trade deficits with China
100 Yuan notes, featuring a portrait of late communist leader Mao
Zedong (File photo)China's central bank says it will not buckle under
foreign pressure to reform its foreign exchange rate. China is trying
to douse market speculation of an imminent currency revaluation.
A senior official from the People's Bank of China says China will not
be pressured to change the pace of its currency reforms.
The comments by vice governor Wu Xiaoling were made to a Japanese
newspaper in late April, but were just posted on the bank's website on
Thursday.
The remarks appear to be aimed at speculators and the United States.
On Wednesday, erroneous reports of an imminent yuan revaluation caused
a brief sell-off of U.S. dollars.
The Chinese yuan is pegged at around 8.2 to the dollar. The United
States and other Western countries say that makes Chinese products
unfairly cheap, causing huge trade deficits with China. The U.S.
Congress has threatened to impose hefty tariffs on Chinese goods if
Beijing does not move to a more flexible exchange system within
months. Beijing has repeatedly said it would institute reforms but has
given no timetable.
Thio Chin Loo, currency strategist at BNP Paribas bank in Singapore,
says recent events are not likely to change Beijing's position.
"I think China has shown that it does not want to bow down to external
pressures in wanting to change its currency regime," she says. "It
said that it would consider moving on the exchange rate based on its
domestic considerations."
Many financial analysts say China's reluctance is caused by fears that
a strong yuan would cut exports and lead to unemployment, as well as
hurt its already weak banking system.
Speculation about a yuan revaluation has been rife over the past few
weeks. But, on Wednesday it reached a frenzy, triggered by a poorly
translated news story in China's state media that indicated a
revaluation might come soon.
Late last week, David Eldon, chairman of the international bank HSBC,
said revaluing the yuan at this time would not be in China's interest.
"There are a lot of speculators who are sitting on the wings waiting
for there to be a revaluation," he said. "If you revalue the currency,
who's going to gain from this? It's going to be the speculators. I
don't think that that is something that necessarily people want to
see."
Beijing has been trying to slow its rapidly growing economy by
modestly raising interest rates and controlling the inflow of foreign
investments.