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G7 meeting expected to find it hard to force RMB appreciation

www.chinanews.cn 2005-02-01 16:20:44

Chinanews, Feb. 1 - At the Group of Seven Leading Industrial Countries
(G7) Meeting of Finance Ministers to be held on Feb 4th and 5th in
London, finance ministers from the seven countries will once again
remember to talk about the RMB exchange rate. However, the Chinese
government has already set the tone for its currency policies this year
-- to further improve the RMB exchange rate mechanism and keep the RMB
exchange rate relatively stable at a reasonable and balanced level. The
G7 talks will likely yield no concrete action.
Huang Ju, vice premier of the State Council, reemphasized recently that
the exchange rate system of the RMB would be revisited after the
completion of economic restructuring and the banking system reform.
Senior Chinese financial officials such as Zhou Xiaochuan have made it
clear on various occasions a few days ago that China's exchange rate
policy would not change because of outside pressure.
Market analysts generally think that the G7 meeting this time will not
come to any resolutions on urging a RMB appreciation. The
communiqu��following this meeting will likely reiterate the same
statement of the previous two meetings, and appeal to China for a more
flexible exchange rate system.
In addition, the Report on Steady Promotion of a Market-based Exchange
Rate released by the People's Bank of China on Jan 31, 2005 pointed out
that China would continue to promote a stable market-based interest rate
system, loosen the restrictions on minimum original deposit, gradually
realize the deposit interest rate marketization and further simplify the
management of small-sum foreign currency deposits in domestic banks. At
the same time, China will strengthen its effort in building the interest
rate administration system around the Central Bank for better interest
rate adjustment and control.

          ��Chinese minister to attend G7 to discuss the RMB (2005-01-28)

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