China announced Thursday its currency, the RMB yuan, will be
traded at a rate of 8.11 to the US dollar starting 19:00 Thursday,
and the yuan to US dollar pegging system is switched to a basket of
foreign currencies.
Over the past few years, the Chinese yuan has been pegged to the
US dollar at the rate of one dollar for 8.27 yuan, the latest move
revalues the rate by 2.1 percent.
The central bank
said starting from July 21, it will publish the trading rates
between the RMB and major foreign currencies at the closing of
daily market trading, and the announced rates will be used as the
central parity for the following trading day.
The central bank said the move marks the start of building a
more resiliently managed floating RMB exchange rate mechanism which
is based on market supply and demand and is adjusted in relation to
a basket of major foreign currencies.
The announcement said the trading price between the dollar and
the yuan at the inter-bank foreign exchange market will float
within a 0.3 percent band around the official central parity, while
the trading prices between the yuan and non-US dollar currencies
will float within a certain range around the official central
parity.
The central bank will readjust the floating band at appropriate
times according to market development conditions as well as
economic and financial situations.
"The RMB exchange rate will be more flexible based on market
condition with reference to a basket of currencies," the
announcement said, claiming that the central bank is responsible
for maintaining the RMB exchange rate basically stable at an
adaptive and equilibrium level, so as to promote the basic
equilibrium of the balance of payments and safeguard macroeconomic
and financial stability.
(Xinhua News Agency July 21, 2005)