- XIANGHE, China (XFN-ASIA) - China will continue to increase the flexibility of the yuan exchange rate and provide more derivative products to allow companies to hedge their currency risk, a vice-governor of the People's Bank of China said.
'We will continue to improve the yuan formation mechanism...and provide more financial derivatives to companies to hedge risk,' Su Ning told a business forum here.
'We will make the yuan more reflect changes in the market situation, to be more decided by market demand and supply....to increase its flexibility,' the central banker said.
Su's remarks were in line with the central bank's stated policy of encouraging flexibility but with a gradual approach..
The yuan has risen just under four pct since being unshackled from its dollar peg on July 21 last year, including that day's 2.1 pct revaluation.
Critics of the exchange rate continue to insist that China needs to allow the yuan to appreciate faster, and Asian currency flexibility is expected to be one of the major talking points at the IMF meetings in Singapore.
Government officials - most recently ex-central bank governor Dai Xianglong yesterday - have said repeatedly since then that their priority is to develop an onshore foreign exchange market and ensure that Chinese corporates and financial institutions are able to manage their foreign currency risk.
Currency forwards were launched last autumn, while the central bank engaged in a series of swap transactions with domestic commercial banks towards the end of last year.
'We will continue to improve the yuan formation mechanism...and provide more financial derivatives to companies to hedge risk,' Su Ning told a business forum here.
'We will make the yuan more reflect changes in the market situation, to be more decided by market demand and supply....to increase its flexibility,' the central banker said.
Su's remarks were in line with the central bank's stated policy of encouraging flexibility but with a gradual approach..
The yuan has risen just under four pct since being unshackled from its dollar peg on July 21 last year, including that day's 2.1 pct revaluation.
Critics of the exchange rate continue to insist that China needs to allow the yuan to appreciate faster, and Asian currency flexibility is expected to be one of the major talking points at the IMF meetings in Singapore.
Government officials - most recently ex-central bank governor Dai Xianglong yesterday - have said repeatedly since then that their priority is to develop an onshore foreign exchange market and ensure that Chinese corporates and financial institutions are able to manage their foreign currency risk.
Currency forwards were launched last autumn, while the central bank engaged in a series of swap transactions with domestic commercial banks towards the end of last year.
© 2006 AFX News
