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Sun Mar 7 16:55:42 GMT 2010
BEIJING--Central bank Gov. Zhou Xiaochuan said China will eventually move away from its current exchange-rate policies, which he described as a temporary response to the global financial crisis, but downplayed the idea that a move could come in the near future.
Mr. Zhou's comments Saturday at a press conference were the most direct suggestion to date by a Chinese official that the yuan's current de-facto peg to the dollar will not be maintained indefinitely. Previously, government officials have stressed currency stability without much qualification, and rejected foreign pressure to allow the yuan to strengthen.
Mr. Zhou said the current policy - which has kept the yuan's value basically unchanged against the dollar since July 2008 - was a "special measure" adopted in unusual circumstances. "This is a part of our package of policies for dealing with the global financial crisis," he said. "These kinds of policies sooner or later will be withdrawn."
Economists and currency-market participants increasingly expect that China will at some point this year allow its currency, which is formally known as the renminbi, to rise against the U.S. dollar. Inflation in China is picking up as the economy recovers, a problem many economists say a stronger currency could address.
stronger yaun = weaker dollar = ?
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