Chinese central bank chief said here on Sunday that China would consider widening its currency yuan's trading band if necessary though it is comfortable with current settings.
Zhou Xiaochuan, governor of the People's Bank of China, told a group of journalists in Cape Town shortly after the conclusion of the G20 meeting that "The floating band is okay for now. If necessary, we can consider to expand that. We're going to gradually enlarge the exchange flexibility."
However, he did not give a timeframe.
I do not have to spell out why this news matters in great detail. Among other things, the EU and US have already joined forces in China bashing and moves by the US to make the IMF police China's FX policy are all familiar to constant readers of the IPE Zone. Anyway, People's Bank of China (PBoC) Governor Zhou Xiaochuan dangled the carrot of widening the yuan's trading band (read: to allow faster RMB appreciation) at the G-20 meeting in Johannesburg, South Africa. Unlike the statements of Cheng Siwei which ruffled currency markets a few days ago, those of Zhou more clearly bear the mark of Chinese finance officialdom. Does China really intend to widen the band or is it just trying to keep a temporary lid on anti-Chinaism? We'll see. From Xinhua: