China Regulator: No Big Yuan Move Likely

[HenryTo]

This still sounds pretty vague to me but I guess it at least discredits the idea that China will revalue the Renminbi sometime this year or even in early 2006:
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Sunday April 24, 8:33 PM

China Regulator: No Big Yuan Move Likely

BOAO, China (Reuters) - China will prudently speed up reform of its controversial exchange rate regime but investors should not expect a large appreciation of the yuan, a senior official at China's foreign exchange regulator said on Sunday.
China would also take the global impact of any move into consideration, Wei Benhua, deputy chief of the State Administration of Foreign Exchange, told the Boao forum for Asia on the Chinese island of Hainan.

"We will positively but prudently accelerate the process of reform of the renminbi exchange rate regime step by step and the timing will be well chosen," Wei said.

Wei's comments came as China and other Asian countries come under pressure to let their currencies appreciate to help address global current account imbalances.

U.S. and European officials have repeatedly called for China to let the yuan, also called the renminbi, rise in value, but Wei suggested there would be no large revaluation in the near future.

"You can't expect the renminbi to appreciate by 10 percent tomorrow. It would be disastrous for China as well as to other countries," he said.

Chinese officials have suggested the aim of any change would be to make the yuan more responsive to market forces rather than push through a one-off appreciation, and many have made clear their disdain for speculators betting on a rise.

Wei said Beijing had no timetable for reforming the yuan -- pegged in a razor-thin band near 8.28 to the dollar -- and would carry out "more consideration on this issue."

Chinese financial institutions were concerned about possible changes to the exchange rate regime, he said.

"I think it's not easy for those persons in charge of those enterprises and banks to adapt themselves to new changes in circumstances and how to fend off the possible risks," he said.

Asked to comment on prospects for a revaluation of the yuan this year or in early 2006, Wei said he would not be in favor of such a move.

RESPONSIBLE APPROACH

Although U.S. manufacturers complain that the yuan's exchange rate is artificially weak, giving Chinese exports an unfair price advantage, Wei warned that an adjustment would have little impact on China's trade deficit with the United States.

"If we adjust a little bit it doesn't contribute very much to reducing the trade deficit with the U.S." he said.

The governor of China's central bank, Zhou Xiaochuan, told Reuters on Saturday that expectations were "too high" that a change in the forex regime could resolve problems like trade friction with the United States.

Wei said China was a responsible investor in international financial markets and was willing to contribute to global stability and development.

China's philosophy in managing its massive foreign exchange reserves, which hit $659 billion at the end of March, was based on long-term and strategic considerations, Wei said.

"We never target short-term profit, and we will not be involved in speculative operations," he said.

Forex markets have been watching closely for any sign that China or other countries may be shifting foreign currency holdings into euro and other currencies to guard against any further falls in the U.S. dollar.

Wei said China's policy on its balance of payments was to "basically achieve a general balance."