RMB "very close" to equilibrium: central bank official

Source:Xinhua Published: 2013-3-6 13:27:01

The value of China's RMB yuan has been very close to its equilibrium and its exchange rate will continue to be stable this year, Yi Gang, deputy governor of the People's Bank of China, the central bank, said Wednesday.

"The exchange rate of RMB will be more balanced and resilient and maintain basically stable this year," said Yi on the sideline of the annual session of China's political advisory body.

Since China activated exchange rate reform in 2005, the value of RMB yuan against U.S. dollar has surged by more than 30 percent.

The currency ended its appreciating trend last year as shrinking trade surplus and capital outflow have increased its depreciating pressure.

"The value of RMB yuan is very close to its equilibrium," said Yi.

Yi Gang said he wished the currency policy makers of the world's major economies could observe the consensus, reached at the G20 meeting last month, of making no competitive currency devaluation.

"There is no winner in a currency war," said Yi.

G20 members promised at the meeting that they would not wage a currency war and agreed that monetary policy should primarily serve as a tool for domestic economy.

Still there are widespread concerns that the world's major economies would drive down their units to gain a trade advantage through monetary easing policies.

Since Japanese Prime Minister Shinzo Abe took his post, the yen has fallen by 20 percent as a result of bold inflationary moves. The yen has been veering between 92.30 and 94.30 versus the U.S. dollar over the past couple of weeks, the lowest in more than a year.

Analysts fear that the move may force other economy to competitively devalue their currencies to sustain advantages in trade.

China is fully prepared for a looming currency war should it, though "avoidable," really happen, said Yi Friday.

"In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

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