Premium
This is an archive article published on November 30, 2004

China says speculation imperils yuan reforms

China’s central bank slammed speculators in the foreign exchange market on Monday, saying those pouring money into the yuan currency in...

.

China’s central bank slammed speculators in the foreign exchange market on Monday, saying those pouring money into the yuan currency in search of profits could undermine efforts to make it more flexible.

The warning came a day after Premier Wen Jiabao signalled there would be no rush to reform the currency, denting fervent market speculation the Chinese currency could be revalued within days.

As the central bank highlighted the dangers of speculation on reform plans, China held a rare meeting with South Korea and Japan on the sidelines of an Asian summit in Laos where the leaders of the three countries agreed on the need for stable currency rates.

Story continues below this ad

Market speculation has been rife China may soon loosen its grip on the yuan by widening its thin trading band near 8.28 per dollar or re-pegging it to a currency basket, or some combination of these options.

Forex markets buzzed last week with talk that the closed-door meeting of the Central Economic Work Conference could yield the first steps in currency reform, though most China analysts do not expect any action soon.

“On the renminbi (yuan) issue, there is some speculative force or behaviour at present which cannot be stopped completely,” the China News Service quoted Vice Central Bank Chief Li Ruogu as telling an economic forum.

“Such speculation, whether by people in China or overseas, will do no good at all to China’s reforms of the exchange rate and its economic development.”

Latest Comment
Post Comment
Read Comments
Advertisement
Advertisement
Advertisement
Advertisement