BEIJING — China must make the yuan exchange rate more flexible in the coming months to boost trade and help authorities restructure the economy, a central bank adviser was quoted as saying Thursday.
Policymakers should also internationalise the yuan by encouraging foreign countries to trade with China using the local unit as a settlement currency, Xia Bin said in an opinion piece in the state-run China Daily.
The comments by Xia, an adviser to the People's Bank of China, came after the central bank vowed in June to let the yuan trade more freely against the dollar, amid mounting international pressure for a stronger Chinese currency.
Since the June 19 pledge, the yuan has gained 0.7 percent against the greenback, angering US lawmakers who claim the currency is undervalued by as much as 40 percent and gives Chinese exporters an unfair advantage.
While the move to make the yuan more flexible had been widely welcomed, China needed to loosen its grip on the currency even further to "help stimulate foreign trade and structural adjustments," Xia said.
Last week, the International Monetary Fund charged in a staff report that the yuan was "substantially" undervalued despite Beijing's policy change.
PBOC vice-governor Hu Xiaolian this week defended the yuan's daily trading band, telling state media it was "appropriate" for the time being but could be widened in future.
The yuan is currently allowed to rise or fall by up to 0.5 percent against the dollar within a given trading day, from a central parity rate set daily by the central bank.
On Thursday, policymakers set the central parity rate at 6.7783.
In July 2005, China freed the yuan from an 11-year peg to the dollar and moved to a tightly managed floating exchange rate.
The yuan was effectively pegged at about 6.8 to the dollar from mid-2008, when the global financial crisis started to bite, until the June announcement.
