China says market to decide yuan's value
(Reuters)
Updated: 2005-08-25 13:28

China reaffirmed on Thursday it will let the market decide the yuan's value and not act to appreciate it further, downplaying chances for another currency move similar to last month's landmark revaluation, the Reuters reported.

Economists had foreseen the yuan appreciating gradually over coming months, as U.S. manufacturers complain it remains undervalued despite its 2.1-percent revaluation on July 21.

The central bank, however, has signaled it would not tolerate sharp gains in the currency.

"This will be decided by the market. The government will not decide the yuan's level," central bank vice governor Wu Xiaoling told Reuters in an interview, reiterating earlier comments published in newspapers.

"All policies will be kept stable" in the second half, said Wu, referring to economic and monetary policies, as she was leaving a financial forum in Shanghai, China's commercial stronghold.

Beijing scrapped the yuan's decade-old peg to the U.S. dollar on July 21, roiling global stock and currency markets.

Now, some economists think currency speculators may bet on a bigger appreciation in the yuan, especially with Chinese President Hu Jintao preparing to meet President Bush in September, the Reuter report said.

Reinforcing Beijing's message that further change would be cautious, a top government economist said on Wednesday China will press on with currency reforms but aim to avoid volatility.