China assured the United States that it will continue moving toward a more flexible Yuan exchange rate, a US Treasury official said on Tuesday. The announcement came as the Central bank set the Yuan reference rate at the strongest level since 2005.
Chinese officials meeting with their US counterparts in Washington also agreed to allow US and other foreign banks to sell mutual funds and provide financial custodial services in China.
No specific target or number for the Yuan value will be part of formal agreements between the two nations, the Treasury official said.
The currency has been a focal point of the two-day talks among US Treasury Secretary Timothy F. Geithner, Chinese Vice-Premier Wang Qishan and other officials. Geithner said Monday on PBS and Bloomberg Television that China was “moving carefully” in appreciating the Yuan.
The US also expects China to allow foreign insurers to sell auto insurance there for the first time, the Treasury official said. China also agreed to inspections to try to ensure that Chinese companies are using only legitimate software, the official said.
The People's Bank of China set the rate 0.06% higher at 6.495 per dollar after Governor Zhou Xiaochuan said China has been growing accustomed to the shifts in exchange rates over the years.
One of the driving forces for today's yuan rise is the meeting, said Christy Tan, a foreign-exchange strategist at Bank of America-Merrill Lynch in Singapore. Although the comments from the PBOC governor are quite clear that there's nothing new to add to the existing foreign-exchange policy, they've expressed commitment to currency flexibility and using the yuan to control inflation.
The Yuan gained 0.03% to 6.4919 per dollar, according to the China Foreign Exchange Trade System. The currency touched 6.4892 on April 29, the strongest level since 1993. In Hong Kong's offshore market trading, the Yuan strengthened 0.04% to 6.4805.