Chinese officials have said recently that they will not intervene anymore in domestic currency and will leave it “to roam freely”. The move is part of a strategy to reform current policy, the BBC noted in the online edition.
Asian partners have recently put pressure on China. Investors require China to let the yuan to appreciate by itself. Recently, the Beijing government has been accused of acting on the currency, leaving it too low to help exporters, the British publication highlights. Chinese Premier Wen Jiabao said his government will move to reform, and the yuan value is close to an optimistic level.
China’s national currency has reported and been “subjected” for many years to the U.S. dollar. But since 2005, Asians have allowed the yuan to appreciate, but in a supported measure. Its growth against the U.S. currency was 8% in the last two years. However, investor partners of China continue to say that at this time the yuan is still undervalued. Critics say this gives China an unfair advantage in world trade. Chinese fears are related to a strong currency. This would make Chinese products expensive for foreign buyers.
Analysts say that until the government in Beijing will feel absolutely certain on the impact of a stronger yuan on exports and manufacturing sectors, China can maintain strict controls on currency trading.
The international role
Today’s announcement of the Chinese was seen as another step in China’s efforts to promote an international currency in global trade. Beijing wants the yuan to be a global reserve currency, an alternative to the U.S. dollar. But economists believe this will be possible only after the yuan will be fully convertible. “You still have a limited number of products to choose if you want to invest in China. Asians need to give more strive, to do much more if they want to be really important players in global markets”, say financial experts quoted by the BBC.
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