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US urges China to step up currency reform
2008-01-30
The United States on Wednesday praised China's efforts to allow its yuan currency to appreciate to better reflect the strength of the Chinese economy, but said it was not moving fast enough. "The untold story of our approach to China's currency policy is that it is working, albeit more slowly than we would like," David McCormick, Treasury under secretary for international affairs, said in a speech in New York. After moving the yuan, or renminbi, away from a pegged exchange rate to the US dollar in July 2005, "China's actions were cautious, with the RMB appreciating slowly," McCormick said in the text of his prepared remarks to the Council on Foreign Relations. But more recently, "the pace of appreciation has increased sharply, to roughly seven percent in 2007, and four percent in the last three months alone, or 17 percent annualized," he said. Since the yuan was given a broader trading range, the Chinese currency has appreciated roughly 15 percent against the dollar and nine percent against other major currencies, he noted. "The foreign exchange market in China is also developing: daily RMB fluctuations are larger, the market is deeper, and we have seen rapid expansion in the use of foreign currency hedging instruments."
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