China has no timetable for yuan's full convertibility: central bank official

Fri, Mar11, 2011 11:15:05 |Xinhua

BEIJING, March 11 (Xinhua) -- China's currency, or yuan, will see major progress in its full convertibility in the next five years, but no timetable has been set to achieve this goal, said Hu Xiaolian, deputy governor of the People's Bank of China, the central bank, on Friday.

Yuan's full convertibility is decided by many conditions. The pilot program of allowing yuan in settling cross-border trade will promote its convertibility under the capital account, Hu told a news conference on the sidelines of the ongoing annual session of the National People's Congress (NPC), the nation's top legislature.

Although China has not loosened its control of the capital account, the demand for yuan is on the rise, as the currency is getting more and more popular in the cross-border transactions, Hu noted.

According to the government work report delivered by Premier Wen Jiabao at NPC's annual session, China will continue to increase the use of its currency renminbi in cross-border trade and investment this year.

The country will "press ahead with making the RMB convertible under capital accounts" this year, says the report.

The central bank said earlier this month that it will expand the yuan settlement trial program to the entire country this year from the current 20 provincial regions as there is growing market demand for the business.

China's yuan strengthens to record high of 6.5651 per U.S. dollar

Mon, Mar 07, 2011 09:39:39

BEIJING, March 7 (Xinhua) -- The Chinese currency Renminbi (RMB), or the yuan, on Monday strengthened to an all-time high of 6.5651 per U.S. dollar, according to the China Foreign Exchange Trading System.

Monday's central parity rate of the RMB against U.S. dollar was 20 basis points lower than the previous record of 6.5671 set on last Friday.

The yuan has appreciated 3.84 percent since June 19 last year when the People's Bank of China, the central bank, announced it would further reform the exchange rate formation mechanism to improve its flexibility.

On China's foreign exchange spot market, the yuan can rise or fall 0.5 percent from the central parity rate each trading day.

The central parity rate of the RMB against the U.S. dollar is based on a weighted average of prices before the opening of the market for each business day.

Editor: Zhang Xiang, Xinhua

Macroeconomic indicators - Yuan rise to play role in big China economic shift

Saturday, 05 Mar 2011

Reuters reported that China is in the early stages of an economic rebalancing act that makes a stronger currency an almost inevitable part of the mix and a sustained yuan rise may come far sooner than many foreign players are expecting.

Beijing has started taking broad steps to wean itself off exports and promote greater domestic spending while trying to cope with what appears to be a sustained rise in inflation all of which point to yuan appreciation. While higher inflation in China compared with major trading partners will lead to a stronger real trade weighted exchange rate, traders believe that authorities certainly don't want inflation alone to be the driver meaning that nominal appreciation is part of the equation.

Several FX traders on the mainland think that this change is just starting to take shape, underscored by the yuan march to record highs and should reaffirm the consensus expectations for 5% to 6% appreciation this year contrary to the cautious pricing in the dollar/yuan NDFs.

A senior trader at a Chinese commercial bank in Shenzhen said "China has already started a process to adjust its economic structure and the previous strategy to keep the yuan value at a relatively low level so as to help boost exports will gradually phase out."

The trader said "The yuan will thus increasingly move in line with China economic fundamentals and the most important factor in the fundamentals this year will be high inflation. So the yuan exchange rate will be used in the anti-inflation campaign."

Traders have become more convinced that the People Bank of China will allow more currency strength thanks to calming currency tensions with the United States, especially after the US Treasury declined to name China a currency manipulator in a report last month.

Those currency tensions appear to have prevented China, always loath to be seen bowing to foreign pressure, from allowing as much yuan appreciation as it might have. Now that the hot button yuan has slipped off the diplomatic radar screen, Beijing is more comfortable letting the currency rise.

The PBOC's own actions have also given traders more confidence that further currency strength is in store with the central bank guiding the Chinese currency to a slew of record highs this year.

(sourced:Reuters)

Yuan convertibility may quicken - PBOC

Thursday, 24 Feb 2011

According to a Chinese central bank official, the pace of the yuan convertibility may accelerate as global demand grows for trade settlement in the Chinese currency.

Mr Xing Yujing deputy director general of the monetary policy department of the People Bank of China said "If you look at the history and the progress of international use of our yuan, you find that sometimes demand grows very quickly. He said that if there's demand from the market in order to facilitate trade and investment, the change may be quicker than we imagined before."

Analysts said China is seeking to promote the use of the yuan overseas as part of a longer-term plan to make it an international reserve currency along with the US dollar

Beijing promotion of Hong Kong as an offshore yuan trading hub has resulted in a flurry of yuan denominated corporate bonds also known as dimsum bonds, banks creating new structured products and more Chinese importers settling trade in the Chinese unit.

(Sourced :Todayonline)

Macroeconomic indicators - China raises banks required reserves again

Monday, 21 Feb 2011
Reuters reported that China central bank would once again raise lenders required reserves by 50 basis points and the second time this year and the eighth official increase since the start of last year.
The People Bank of China said the increase will be effective February 24.
It is Beijing latest step to mop up excess cash in the economy. Annual inflation was 4.9% in January and slower than market expectations, but it still marked an acceleration from 4.6% in December.
(Sourced from Reuters)