China’s currency has reached its equilibrium rate and its value is mainly determined by the market, rather than intervention, Beijing’s central bank chief said on Sunday, signalling there is little likelihood of major movement in the yuan’s value in the near future.
In a speech delivered by one of his deputies, Zhou Xiaochuan, governor of the People’s Bank of China, also warned that too much monetary easing by major economies puts inflationary pressure on China at a time when it is striving to boost growth while keeping prices under control.
Zhou’s remarks came as the issue of China’s exchange rate against the US dollar resurfaced in the US presidential race, with Republican nominee Mitt Romney accusing President Barack Obama of ducking an important decision on whether Beijing is manipulating its currency to gain a trade advantage.
The Treasury Department was due to announce a decision on that on Monday, but it said on Friday that the decision would not come until after global finance officials meet in early November, most likely after the November 6 presidential election.
The US has long urged China to lift controls on foreign exchange markets that Washington contends keep the Chinese yuan undervalued, making the country’s exports relatively less expensive in overseas markets.
Zhou said China’s central bank has refrained from intervening in the market in the past year, while the exchange rate against the US dollar has remained at about 6.3 yuan per dollar.