'Crisis major factor in exchange rate policies'
The global economic crisis is a major factor for China at it decides on exchange rate policy, the nation's central bank chief said in remarks published on Wednesday.india Updated: Feb 04, 2009 10:46 IST
The global economic crisis is a major factor for China at it decides on exchange rate policy, the nation's central bank chief said in remarks published on Wednesday.
"At the moment, the global financial crisis is a main factor when determining exchange rate policies," said Zhou Xiaochuan, governor of the People's Bank of China, according to the state-run Financial News daily.
"The global financial crisis has had a negative impact in many ways, and there will be differences in policy deliberations compared with normal times," he was quoted as saying by the paper, which is published by the central bank.
Zhou, who was speaking to reporters in Beijing, was not quoted as giving specific examples of how the crisis would impact policy making.
However, it is widely believed that a strengthened Chinese currency, or yuan, could increase pressure on the export sector, which is already experiencing the most difficult times in years.
Exports fell in both November and December from the same months in 2007, the first declines in seven years, as key overseas markets in Europe and North America were ravaged by recession.
Zhou also reiterated the oft-stated position that China "will maintain the basic stability of the yuan at a reasonable, balanced level."
China delinked the yuan from the US dollar in 2005 after immense overseas pressure, and has since allowed it to rise about 20 per cent against the greenback.
However, overseas critics have insisted on more reform, with US Treasury Secretary Timothy Geithner recently stating during confirmation hearings that China was manipulating its currency.
Critics in the United States have long argued that the yuan is being kept artificially weak and this gives Chinese exporters an unfair advantage.