Yuan at balanced level, drastic appreciation unnecessary
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The exchange rate of China's yuan is now at a balanced level that can reflect national economic power, and a drastic appreciation is not necessary, Wei Jianguo, secretary-general of the China Center for International Economic Exchanges, said Thursday.
If the yuan's real effective exchange rate strengthens by an annual pace between 1.6 percent and 3.32 percent, China will be able to balance its current account, Wei said at a seminar about the yuan, U.S. dollar and world economy.
The real effective exchange rate refers to a currency's exchange rate against a basket of trading partners' currencies, and adjusted for inflation differentials.
According to the China Foreign Exchange Trading system, the central parity rate of yuan weakened 49 basis points to 6.4886 per U.S. dollar on Thursday. The yuan's central parity rate was 6.6227 against the greenback on December 31 of last year.
On China's foreign exchange spot market, the yuan can rise or fall 0.5 percent from the central parity rate each trading day.
Wei reiterated that the country must advance the exchange rate reform with the principles of independent initiative, gradual progress and controllability.
He also advised to push forward the market-based reform of interest rates and yuan's convertibility under the capital account.
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