Shanghai’s foreign-exchange market should control price setting for China’s yuan, Zhang Jianhua (張建華), director of the research department at the People’s Bank of China (PBOC), said yesterday.
“We should develop Shanghai’s foreign-exchange market to match expansion of yuan use overseas,” Zhang said at a conference in Shanghai. “We should try to control price setting. Strong growth in an offshore yuan market might influence the currency’s onshore price.”
China is seeking to allow the yuan to rise to appease foreign criticism, while protecting exports and preventing a further slowdown in economic growth.
China should seek to expand convertibility of the yuan, which would help to build Shanghai into a global financial center, Zhang said at the conference held by the International Finance Research Institute of Shanghai Finance University. The Shanghai market should expand trading of yuan forwards and swaps, and introduce options and swaps at an appropriate time, he added.
The People’s Bank of China said on Thursday it may start to publish the yuan’s exchange rate measured against a basket of currencies rather than just the dollar. It will help shift the market’s attention away from the rate against the dollar, central bank Deputy Governor Hu Xiaolian (胡曉煉) said in a statement on the agency’s Web site.
The yuan’s effective exchange rate “should gradually become a reference” for policy, she said.
The yuan has gained 0.7 percent since the central bank said on June 19 it would allow greater flexibility in the exchange rate, ending a two-year dollar peg.
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