Reports

China yuan reform must defeat speculators: report

(Agencies)
Updated: 2010-05-19 15:29

China's yuan reform must aim to counter expectations of appreciation and fend off speculators, a government insititute said in a report published on Wednesday.

China needs to increase the flexibility of the yuan's exchange rate to prevent its rise from being a one-way bet, the Chinese Academy of Governance said in a report published in the official China Securities Journal.

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The academy, which trains government officials, said that Beijing should step up efforts to increase imports to reduce its trade surplus, thereby alleviating short-term pressure for yuan appreciation.

But the report said the key was for the government to widen the range within which the yuan floats to introduce more volatility in the exchange rate and deter hot money inflows.

The yuan is currently allowed to rise or fall 0.5 percent from a daily reference rate set by the central bank. Some analysts have said that band might be widened to 1 percent as part of long-anticipated exchange rate reform.

Beijing is facing international calls to let the yuan return to a path of appreciation after effectively repegging the currency at about 6.83 to the dollar.