Posted On: October 15th, 2012
Source: The New York Times
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TOKYO (AP) — China’s currency has reached its equilibrium rate and its value is mainly set by the market, rather than intervention, Zhou Xiaochuan, the nation’s central bank chief, said Sunday, signaling that major movement in the renminbi’s value is unlikely soon.
In a speech delivered by Yi Gang, his deputy, Mr. Zhou, governor of the People’s Bank of China, also warned that too much monetary easing by major economies puts inflationary pressure on China as strives to increase growth while controlling prices.
China’s exchange rate against the American dollar has resurfaced in the United States presidential race, with Mitt Romney, the Republican nominee, accusing President Obama of ducking an important decision on whether China is manipulating its currency to gain a trade advantage.
The Treasury Department was to announce a decision Monday, but it said Friday that no announcement would be made until after global finance officials meet in early November, probably after the Nov. 6 election.
The United States has long urged China to lift controls on foreign exchange markets that Washington contends keep the renminbi undervalued, making China’s exports relatively less expensive in overseas markets.
In his prepared remarks, Mr. Zhou said China’s central bank refrained from intervening in the market in the last year, while the exchange rate stayed around 6.3 renminbis per dollar.
“The rate, the spot rate and future rate, determined by the market supply and demand, basically are very close to the equilibrium rate,” he said.
The renminbi has appreciated more than 30 percent against the dollar in nominal terms since 2005, Mr. Zhou said, adding that the currency had “appreciated quite a bit in the past 15 years.”
He outlined progress by China in revamping its financial sector and setting up foreign exchange markets, in the speech delivered after the meeting of the International Monetary Fund and World Bank last week in Tokyo.
Mr. Zhou was among several top bankers and other officials absent from the meeting, apparently to express China’s ire over a territorial dispute with Japan.