China Ctrl Bank Chief: CNY Flexibility Expanding -Caijing
--The yuan's flexibility is gradually being expanded as the influence of market forces slowly grows stronger on China's currency, the nation's central bank chief said.
In an interview to be published in Monday's edition of the local-language Caijing magazine, People's Bank of China Governor Zhou Xiaochuan reiterated China's principle to carry out its foreign exchange reform in a gradual and controllable manner under its own interest, but also talked about a diminishing role of the basket currency the yuan is being referenced to.
"China's policy direction on its exchange rate reform is clear cut: to gradually expand flexibility," Zhou said in the interview, a copy of which was seen by Dow Jones Newswires. "Currently, we are gradually allowing market supply and demand to play a greater role. The weight of the role of the basket currency reference is slowly weakening, while market factors are slowly strengthening. This is a process."
In July 2005, Beijing revalued the yuan 2.1% to the U.S. dollar, scrapped its 11-year-old defacto dollar peg to begin referencing the local unit to a basket of currencies. Since the move to a more flexible forex regime, the yuan has risen about 2.6%, which some trading partners say is too slow, especially as China's economy has powered ahead at growth rates not seen in more than a decade and as its trade surplus balloons.
Zhou gave the interview with Caijing, a weekly magazine respected for its investigative and financial articles, in mid-September following the International Monetary Fund and World Bank meetings in Singapore and U.S. Treasury Secretary Henry Paulson's visit to China last month.
Zhou said the pace toward the yuan's ultimate full convertibility on the nation's capital account was a concern to some participants at the meetings in Singapore, which he attended, and acknowledged outsiders want a faster pace.
"The central bank chiefs of some countries have started to ask whether to put a portion of their reserves' assets in yuan," Zhou said.
Zhou said China's central bank has its own idea of the amount of "hot money" or speculative flows entering China. He didn't give any estimate, but said in the interview with Caijing the pressure from speculative capital shouldn't be overestimated.
Currently, interest rate differentials benefit China, Zhou said, pointing out interest rates of most major currencies are higher versus yuan rates, which is a key factor for speculators when they consider their short-term profits.
When asked about the development of China's move to direct capital outward toward investing in overseas capital markets under the Qualified Domestic Institutional Investor program, Zhou said launching the QDII program is more appropriate at a time when expectations are for the yuan to appreciate.
"If expectations are for the yuan to depreciate, the economic trend is unstable or there is an inflationary situation, the difficulty and risks would be bigger in launching (the QDII program)," he said in the interview.
Volatility in dollar-yuan trading has risen with the yuan hitting post-revaluation highs against the dollar in recent weeks, prompting market speculation China might widen the daily 0.3% trading band of the pair as part of moves to give the yuan more flexibility.
China has been grappling with growing inflows from trade and investment, which has put upward pressure on its currency and foreign exchange reserves. The inflows have helped fuel excessive fixed asset investment and credit growth at home.
Beijing remains concerned about imbalances in the domestic economy, despite two interest rate hikes, two increases to banks' reserve requirement ratio and administrative curbs on overheated industries already rolled out this year as part of an overall tightening policy.
Discussing China's interest rate trends, Zhou acknowledged domestic money market rates and lending rates were diverging.
He said in the interview the downtrend in money market rates were reflecting ample short-term liquidity, which could be due to insufficient moves by the central bank to offset the liquidity and also possibly due to relatively rapid loan growth underpinned by a strong trade surplus.
He said pressure on China's base money in recent years has come from its balance of payments.
But Zhou also said rational commercial banks for the most part also feel the pricing of lending products overall is relatively low, but to raise loan rates is also difficult with competition fierce among the banks.
"Under this kind of situation, the trend of deposit and loan rates, and interbank interest rates isn't totally representing the same things," Zhou said.
China's financial markets are closed Oct. 1-7 to observe the National Day holiday. The local interbank bond market will observe a special trading session Oct. 8, while China's stock, bond and currency markets resume normal trade Oct. 9.
周小川称人民币汇率灵活度正逐渐扩大
中国央行行长周小川表示，中国在人民币汇率确定过程中正逐渐让市场供求关系发挥更大作用。他的这番讲话可能进一步加大市场对央行已准备好扩大人民币日交易区间的预期。
在周一出版的当地杂志《财经》发表的一篇专访中，周小川首次提到“一篮子货币”的参考作用权重慢慢在减弱。
周小川在接受采访时表示，中国关于汇率改革的政策方向是明确的：就是逐步扩大灵活性。
他表示，我们正逐渐让市场供求关系发挥更大作用，“一篮子货币”的参考作用的权重正慢慢减弱，市场因素正慢慢增强，这是一个过程。
周小川的这番讲话正值人民币在过去两周中以一年前人民币汇率改革以来所未有的速度快速升值，美元兑人民币汇率也首次开始上探0.3%的日交易区间上限。
中国政府于2005年7月一次性将人民币兑美元汇率升值2.1%，并放弃执行长达11年的事实上的美元钉住机制，转而实行参考一篮子货币的浮动汇率机制。
花旗集团(Citigroup)在近期的研究报告中指出，他们并不认为近期人民币汇率波动区间扩大只是一时现象，对汇率的调整是中国解决经济发展不平衡问题的必要手段之一。花旗集团预计中国将在近期扩大美元兑人民币交易区间，并预计年底前人民币兑美元将升至人民币7.76元兑1美元。
上周五询价市场，美元收于人民币7.9041元，高于周四的收盘价7.8965元。周五是中国国庆长假前本地汇市的最后一个交易日，中国金融市场将休市一周，10月9日恢复交易。
据《财经》表示，周小川是在9月中旬接受其采访的，当时正值国际货币基金组织(IMF)和世界银行(World Bank)在新加坡召开的年会结束不久，当时与会的七大工业国(G7)呼吁中国及其他拥有巨额经常项目盈余的国家提高汇率灵活度，另外，美国财政部长鲍尔森(Henry Paulson)上月刚刚结束了中国之行。《财经》杂志以深度的财经报导见长。
周小川表示，中国迟早都将调整人民币日交易区间，但他同时表示，中国并不需要为此设立明确的时间表。对人民币汇率交易区间的调整是中国最终实现人民币自由兑换这一目标的手段之一。
周小川在接受《财经》专访时表示，在新加坡召开的国际货币基金组织和世界银行年会期间，国外同行很关心使人民币成为资本项目下可兑换这一问题。他表示，一些国家的央行行长开始提问是否可以在储备资产中放一部分人民币。
周小川表示，现阶段的利差形势对中国有利。他指出，大部分主要货币的利率水平目前均高于人民币利率水平，而利差是投机者考虑短期获利的关键因素。周小川表示，不应过高地估计投机性资本流入给中国造成的压力，但他没有给出任何具体的估计。
他承认中国货币市场利率和贷款利率之间存在不同趋势，货币市场利率在走低，而贷款利率虽然还处于一个相对较低的水平上，但仍是上升的趋势。
为遏制潜在的通货膨胀压力和降低经济增长速度，中国今年以来已经两次上调基准利率，今年上半年中国经济增长速度高达10.9%。 政策制定者还两次上调银行准备金率，并颁布各种行政法规来防治部分行业发展过热。
周小川在接受采访时表示，货币市场利率走低反映了市场短期资金的充裕，而这在一定程度上可能是由于央行资金回笼力度不够造成的，也有可能是贸易顺差日益增长下信贷快速增长所造成。
周小川表示，近年来中国货币基础所面临的压力主要来自国际收支的不平衡。
中国的国际收支受到来自贸易和经常项目两方面顺差的支撑。2005年中国经常项目盈余较上年增长一倍以上至1,608.2亿美元，其中贸易顺差增长两倍以上至1,020亿美元。
资金的大量流入给人民币汇率和中国的外汇储备带来上行压力，并推动了固定资产投资以及信贷的大幅增长。
为遏制与贸易资本流入相关的变相融资和投机行为，中国国家外汇管理局上周五颁布政策，将违反外汇管理规定的企业列入“关注企业”名单，其中包括年度内贸易收汇与应收汇总额相差10%以上的企业。。
同时，中国央行上周六在货币政策委员会第三季度例会后发表的一则声明中重申，将保持稳健的货币政策，合理控制信贷和投资增长。
J.R. Wu
