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China urges major countries to stabilize currency
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China Friday urged major countries to stabilize their currency, which is "very important" for a stable international financial environment.

Addressing a press conference held Friday after the fifth Sino-U.S. Strategic Economic Dialogue (SED), Zhu Guangyao, assistant minister of finance, said: "a stable external economic environment is very important for those developing countries affected by the global financial crisis. We hope major industrialized countries to shoulder the responsibility and take measures to maintain a relevant stability of the currencies."

Though it was not listed as a topic of the SED, currency issue aroused great concern prior to the highest-level dialogue between China and the United States given the recent decline of RMB in value against the U.S. dollar.

The yuan fell as low as 6.8845 per U.S. dollar on the over-the-counter market on Thursday morning, declining by the 0.5 percent daily limit. It is allowed to trade by up to 0.5 percent against the U.S. dollar on either side of the central parity (reference) rate.

In a fact sheet issued by the U.S. after the SED, the United States recognized that "currency movements would be uneven over shorter periods", but also encouraged China to "continue, and accelerate" the appreciation and flexibility of the yuan.

Zhu stressed that China will reform the floating exchange rate policy, which is based on market demand and adjusted and managed according to a bucket of currencies, in the principle of self-initiated, gradual and controllable change.

China will give a greater role to the market demand in RMB exchange rate formation, make the exchange rate more flexible and maintain its stability in a reasonable and balanced level, Zhu said.

The two-day fifth SED was concluded in Beijing on Friday morning. The two sides reached important consensus on the financial turmoil and critical issues of the two economies and issued a fact sheet.

(Xinhua News Agency December 5, 2008)

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