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One-year reform pushes yuan rise

06-20-2011 09:06 BJT

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China's yuan has hit a fresh high against the US dollar since the central bank launched the reform of its currency's exchange rate mechanism one year ago. The World Bank has forecast that the yuan will likely spell the end of the US dollar's dominance of the global financial system by 2025.

The central bank announced a year ago that it would further reform the formation mechanism of the yuan's exchange rate to introduce more flexibility.

Within one year, China has let its currency rise 5.6 percent against the US dollar.

The country's purchasing power will become stronger as it allows the yuan to rise.

This is expected to enable China to consume and import more, narrowing the surplus with trade partners.

However, an advisor to the central bank's monetary policy committee, says the dwindling surplus at the beginning of this year leaves less room for the yuan's appreciation.

China's central bank said Tuesday in an annual report that the country would further reform its exchange rate formation mechanism, adding the reform could play a positive role in curbing rising inflationary pressure and asset price bubbles.

And it's not only doing good for China's economy.

Meanwhile, a World Bank study released Tuesday concludes that the currencies of new, large economic powers will play a more important role in the international financial system. China will have to internationalize the yuan to better support its industrial and trade development, and within just over a decade the currency is set to become a powerful alternative to the euro and the US dollar.

Backgrounder on yuan rise
Within nearly one year, the central parity rate of the yuan has strengthened over 3,500 basis points from 6.8275 against the US dollar set on the first trading day after the reform. Full Story>>

Crossover: More on currency exchange policies
For more on the currency exchange policies, CCTV was joined on the line by Professor Liu Baocheng, from the University of International Business and Economics. Full Story>>

Tele interview: RMB exchange rates reform
It has been a year since the People's Bank of China promised it would be more flexible in managing the yuan. But what achievements have there been, if any in that period and what can we expect to happen with RMB exchange rate reform in the future. Full Story>>

Editor:Shi Jierui |Source: CNTV.CN

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