China has doubled its currency's trading band against the US dollar for the first time since 2007. From Monday, the yuan's exchange rate with the dollar will be allowed to fluctuate by 1 percent, up from 0.5 percent.
China's central bank will allow its currency to fluctuate twice as much against the US dollar in daily trading, starting on Monday.
The yuan's trading band with the dollar will rise from 0.5 percent to 1 percent from Monday, which will allow the currency's value against the US currency to trade a little more freely.
The long-anticipated move came a week before of the annual spring meeting of the International Monetary Fund (IMF) in Washington, where pressure is usually stepped up for China to loosen its currency controls.
Although the increase is small, it may indicate Beijing is willing to make concessions to the US and other western nations, who have long argued that China's currency controls mean that their currency is so weak it gives China a competitive edge by making their exports cheaper abroad.
Recently, however, China's multibillion-dollar trade surplus with other major industrial nations has narrowed and even swung to a deficit in February, making it less likely that the yuan will appreciate substantially. Chinese leaders have said in the past that they plan to eventually allow the yuan to trade freely, but they insist sudden and drastic changes would disrupt the economy.
The central bank took the unusual step of issuing a statement in English as well as in Mandarin, possibly to make sure its message got across to its Western trading partners.
The yuan was pegged to the dollar until July 2005 and has since appreciated some 30 percent against the greenback. The Chinese central bank sets a daily yuan/dollar exchange rate, leaving little room for fluctuations.
ng/sb (AP, dpa, AFP)