PBOC poised to widen trading band of yuan
Currency's pricing system to be altered 'soon' in move that shows Beijing's eagerness to push on with financial reform despite faltering recovery
Beijing is set to widen the yuan's trading band to make the pricing system for the currency more market-oriented.
The move reflects the resolve of policymakers to push ahead with financial reforms despite the shaky economic recovery and rising inflows of capital.
Yi Gang, deputy governor of the People's Bank of China (PBOC), said at an International Monetary Fund conference in Washington the widening of the trading band would come soon.
The PBOC controls the yuan's movement by setting a daily rate at which it starts trading. Last April it doubled the trading band to 1 per cent on either side of the bank's daily reference rate.
Economists expect the band will be widened to 1.5 to 2 per cent from as early as this quarter, giving traders greater leeway to push the yuan up or down.
Zhang Zhiwei, Chief China Economist at Nomura Securities, said: "This shows China will take bolder steps in financial reforms this year. The pace of exchange and interest rate deregulation will pick up."
The central government said last month it would hasten reform, and the retention of market-advocate Zhou Xiaochuan as governor of PBOC in March was widely seen as an endorsement of the push for change from the top leadership.