China official says currency change unlikely soon

China should quicken preparations for making the yuan more flexible, a top government think-tank has said, even as a senior financial official said there was no need to change the currency in the near future. "Steps to reform the exchange rate mechanism should be quickened and the floating range of the exchange rate should be appropriately widened," the State Information Centre said in a report seen on Thursday.
"Construction of the financial market groundwork to lay foundations for reforming the foreign exchange system should be stepped up," said the report, which was published in the China Securities Journal.
Speculation that Beijing is getting closer to unshackling the yuan which has been pegged at about 8.28 to the dollar since the 1997/98 Asian financial crisis, has increased since China raised interest rates for the first time in nine years last month.
Countries such as the United States have pressured China to let the yuan float freely, saying the current peg of 8.28 to the dollar is too low and makes Chinese exports unfairly cheap.
But Vice Finance Minister Lou Jiwei on Thursday was quoted as saying it was not likely there would be a significant change in the currency policy because China's foreign trade was roughly in balance.
"It is not very likely that the renminbi (yuan) exchange rate will see any large change in the near future," Lou was quoted as saying by the Economic Information Daily.
China expected to post a surplus of about $10 billion out of $1.1 trillion in total trade this year, Lou said.
Based on that, "China has no reason to adjust the exchange rate", Lou told a business summit on Wednesday. Lou's comments were in line with previous statements from officials that China plans to free up its currency only gradually and only after tackling reform of its banks.
The State Information Centre, which is under the powerful State Development and Reform Commission, said China should act quickly to introduce "market-makers" in the official foreign exchange market to help shore up trading.
In addition, more banks should be allowed to tap currency forwards to help domestic firms hedge risks, and China should open up its sheltered foreign exchange, money and bond markets wider to overseas investors, it said.