China offers to make yuan more flexible

China today offered to make the yuan more flexible, as part of its efforts to improve the RMB exchange rate regime, so that it reflects market supply and demand.

"In further proceeding with reform of the RMB exchange rate regime, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies," the People's Bank of China said today.

The Chinese central bank, however, said the exchange rate floating bands in the inter-bank foreign exchange market would remain the same as previously announced.

"In view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China, the People´s Bank of China has decided to proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility," the release said.

China's monetary authorities have been under constant pressure, especially from the United States, to allow the yuan to rise in value in order to help reduce global economic imbalances, including the surging US trade deficit with China.

The Chinese central bank said the managed float of the RMB against a basket of currencies has made steady progress since its introduction on 21 July 2005 and has produced expected results.