Market will eventually decide RMB exchange rate: PBoC Governor

BEIJING -The Chinese Government will significantly reduce its intervention in the currency exchange rate if targets for foreign exchange reform are realised step-by-step and when the right conditions are in place, according to China’s top banker.

The international foreign exchange market will experience some abnormal fluctuations as major countries adjust their currency policies, People’s Bank of China Governor, Zhou Xiaochuan, told reporters at the end of the two-day China-US Strategic and Economic Dialogue in Beijing.

As a result China, wants to be discreet about the spillover effect, meaning that China is likely to have fully-liberalised interest rates within two years, but the timetable will depend on economic circumstances at home and abroad.

The statement is another indicating that currency liberalisation may occur soon, and is supported by a recent decision to scrap the floor limit for bank lending rates.   (ATI)