Central bank raises hope for more currency reform
And limits on iPBOC will gradually expand the yuan's trading band to help make the currency more flexible and market-driven, says Zhou Xiaochuan
With a shift in tone and language, the central bank governor has dangled the prospect of speeding up currency reform and giving markets more room to set the yuan's exchange rate as he underlines broader plans for sweeping economic change.
The central bank, under Zhou Xiaochuan, has consistently flagged its intention to liberalise financial markets and allow the yuan to trade more freely, even before the Communist Party's top brass unveiled late last week the boldest set of economic and social reforms in nearly three decades.
But since the 60-point reform plan was released, Zhou has suggested urgency in pushing for change, although he has not provided any specific timetable. He promised on Saturday to "pull out all stops to deepen financial sector reforms".
Dariusz Kowalczyk, an economist at Credit Agricole in Hong Kong, said the governor's comments could mean that the People's Bank of China would widen the trading band of the yuan in the near term.
Freeing up the currency would imply a large appreciation versus the dollar
"That probably means there is more upside for the renminbi," he said.
The yuan has risen this year to 6.09 per US dollar from 6.23 at the end of last year and hit a record high of close to 6.08 last month.