Chinese Premier Wen Jiabao (
The government wants to create an exchange-rate mechanism based on "market demand for and supply of" the currency, Wen said in a speech carried by the official Xinhua news agency. He didn't give a time frame, adding China plans to keep the yuan "basically stable at a reasonable and balanced level."
Wen's comments come amid intensifying speculation over the future of the yuan, fixed at about 8.3 to the dollar since 1995.
The US and other countries including Japan have pressured China to let the yuan rise, arguing the fixed link undervalues the currency and gives the country an unfair trading advantage.
"If the government were to set the yuan's exchange rate based on current demand for the currency, it would have to revalue it," said Chris Leung, an economist with DBS Bank Hong Kong Ltd. "More people are converting their foreign assets into yuan because they expect it to appreciate in value."
A US Treasury-led team visited Beijing last week for two days of talks on financial-system changes that may pave the way for a more flexible currency, as Treasury Secretary John Snow said in a US television interview that China is "committed" to moving toward a free-floating yuan.
China's foreign reserves surged by a record 40.7 percent last year to US$403 billion and increased by a further US$13 billion to US$416 billion in January.
"If the inflow of foreign exchange continues, the Chinese government would have no choice but to widen the yuan's trading band," Leung said. "The government has to manage market expectations and say explicitly what its currency policy will be to stop the speculation."
The timing of any change remains unknown. China's government hasn't released any timetable, nor detailed how it might carry out an adjustment to the exchange-rate regime.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
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