Brussels, 18/05/2005 (Agence Europe) - Making the Yuan exchange rate more flexible has been announced by Beijing on many occasions but diplomatic pressure for a position from the G7 has not been enough to get the Chinese authorities to come up with a precise calendar of reform. In a report to Congress, the US Treasury reaffirms its demands in the face of Chinese procrastination (and insists on a revaluation of the Chinese currency in the next six months). This biannual report on exchange rates and trade indicates that the Treasury “will follow Chine market changes very closely over the next six months” in view of preparing its next report. The formulation chosen in this document evidently cuts with the repeated appeals made by the Group of the most industrialised countries (USA, Canada, Japan, United Kingdom, France, Germany and Italy), while underlining the need to correct the imbalances in the world. A reduction in this respect requires more flexibility in Asian currencies, particularly the Yuan, but also stronger growth in Europe and Japan, as well as an increase in savings in the USA - areas where progress has been slow.
In a press statement the US Secretary to the Treasury John Snow called on China to put an end to the rigidity of exchange rates but moderated his speech, explaining that they were not calling for a total and immediate flotation with totally deregulated capital markets. He said that this would be an error at this stage as the banking sector was not ready. Snow said an intermediate stage was needed, which reflected conditions underpinning the market and which would allow for a subtle transition, when that was appropriate, towards total flotation.
In an interview on i-tele television channel, the Governor of the Bank of France, Christian Noyer declared “I have total confidence that the Chinese will reform their exchange rate polices”. Noyer also said, however, that this should be done gradually.