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PBOC Denies Revaluation Coming
2005-7-15 18:03:49      Agence France-Presse
China's central bank denied it was planning to announce a revaluation of its currency.

Related Event: RMB to Go Up?

The denial came after the Bush administration reportedly told key senators that it expects such a move in August.

"There is no timetable," central bank spokesman Bai Li said, reiterating China's standard position on any change in its currency regime.

The Financial Times Friday said the US government had told Senators Charles Schumer and Lindsey Graham, co-sponsors of a bill that would impose a 27.5 percent tariff on imports of Chinese goods in the absence of any forex change, that it expected a move next month.

In June the senators had agreed to delay a vote on the bill after being assured Beijing would revalue the yuan during discussions with Treasury Secretary  John Snow and Federal Reserve chairman Alan Greenspan.

"Senator Graham and I believe that the administration is convinced that China will begin a revaluation process this summer, forced by our bill's success in the Senate," Schumer was quoted as saying.

However, Treasury spokesman Tony Fratto said no assurance had been given on a specific timeframe.

"Secretary Snow did not provide an assurance on a specific timeframe for when China would reform its currency regime. Targeting a specific date or timeframe is counter-productive," Fratto said in the report.

The newspaper also said that the US Treasury had told Beijing it needs to revalue the yuan by at least 10 percent against the dollar to prevent the US Congress from enacting protectionist legislation.

It added that China was considering introducing a currency regime similar to the managed float operated by Singapore, one where the yuan would be pegged to a basket of currencies reflecting the country's weight in world trade.

The details of the currency weightings of the basket would not be made public, the newspaper said, citing a person familiar with the Chinese administration's thinking.

Whatever adjustments China makes to its currency regime, analysts said the time was ripe for revaluation.

"Our view remains that a large 10 percent revaluation of the yuan against the dollar is imminent," said ING Barings chief economist Tim Condon.

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