China should allow the yuan to move as much as it can within its new currency regime, the International Monetary Fund urged on Thursday. "We would encourage the authorities to utilise fully the scope for flexibility in the new exchange rate arrangement," IMF spokesman Thomas Dawson told a regular press briefing.
The Chinese central bank said earlier on Thursday that the yuan's value from now on would be linked to a basket of currencies of China's main trading partners.
Dawson said the revaluation of the yuan by 2.1 percent gave the Chinese authorities more room for monetary independence and enhanced the government's ability to manage the economy.
"The change in China's exchange rate regime represents a move in the direction of greater exchange rate flexibility," Dawson told a regular news briefing. "Greater flexibility is very much in China's best interest."
IMF Managing Director Rodrigo Rato told Reuters in an interview on Wednesday the IMF believed that China sees itself technically ready to move to a more flexible exchange rate policy.
IMF officials had recently returned from Beijing following annual economic consultations and for the past two years had been advising the authorities on its economy.
The IMF's board of member countries will discuss the staff report on China in early August that is likely to include discussion on the new exchange rate regime.
Rato said the IMF had made clear to Beijing it was in China' own economic interest to loosen the yuan's close tie to the US dollar.
Dawson said the global lender was ready to work with Chinese authorities "on the continuing evolution" for the exchange rate system.
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