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Fast yuan gains could hurt economy
(Reuters)
Updated: 2006-02-28 15:30
China needs to keep its currency stable because an overly rapid appreciation
could hurt its economy, a senior central banker was cited by the official China
Securities Journal as saying on Tuesday.
"If the yuan rises too
rapidly, a lot of overseas investors might move their factories or companies out
of China," Tang Xu, director-general of the research bureau of the People's Bank
of China, was quoted as saying.
"That would increase unemployment and hurt our economy, and commercial banks
could also face a difficult operating environment," Tang said.
If interest rates were too low, they could encourage too much fixed
investment, Tang added.
Tang reiterated the central bank's pledge to continue making the yuan
exchange rate more market-oriented.
China revalued the yuan by 2.1 percent to 8.11 against the dollar
in July. As of Monday, when the yuan chalked up a fresh post-revaluation close
of 8.0407 to the dollar, it had strengthened a further 0.86
percent.
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