Beijing applauds US-Japan intervention
Beijing yesterday breathed a sigh of relief and hailed joint United States-Japan intervention to halt the yen's alarming slide, a move many economists said was prompted partly by high-profile protests from mainland officials and the media.
'We are glad to see the exchange rate of the yen is picking up,' Xinhua news agency quoted central bank governor Dai Xianglong saying.
Just hours before the intervention late Wednesday, a senior mainland foreign trade official was quoted by Reuters saying for the first time Beijing might consider devaluing the yuan if the yen continued its fall.
The following day, the China Daily ran a front page story at the request of the official denying making the remarks, indicating the degree of nervousness over the subject.
Foreign Ministry spokesman Zhu Bangzao said Beijing welcomed efforts by Washington and Tokyo to reach a 'common understanding' on the yen.
'This was necessary and we welcome it,' Mr Zhu said.
Mr Dai also reaffirmed the yuan would not be devalued.
'It's unnecessary to do that,' he said.
The yuan closed yesterday unchanged at 8.28 against the US dollar.
Economists said the surging yen would definitely relieve pressure on the mainland currency to devalue. Beijing's exports and incoming foreign investment - engines for economic growth - have been slowing significantly amid the Asian financial crisis.
An unchecked slide in the yen could further slow the mainland's economy and force it to devalue the yuan, kicking off a fresh round of competitive regional currency devaluations plunging Asia into economic depression with its impact spreading to the rest of the world.
'Mainland officials are obviously relieved at the yen appreciation,' Standard Chartered Bank senior economist Liao Qun said yesterday.
Morgan Stanley Dean Witter senior economist Andy Xie said Beijing's chorus of protests was one of the most important reasons behind the US move to buy up yen.
This proved the mainland was playing a bigger role in international financial affairs, economists said.