China to widen yuan trading band against US dollar
BEIJING (AFP) - China's central bank said on Saturday it would widen the yuan's trading band against the United States (US) dollar from 0.5 per cent to 1.0 per cent, loosening its grip on the Asian giant's tightly controlled currency.
The yuan is currently allowed to trade 0.5 per cent on either side of a midpoint price set by the central bank every trading day. The new rules will come into effect on Monday, the bank said in a statement.
Beijing's trading partners have long criticised its yuan exchange rate, saying it is kept artificially low, fuelling a flow of cheap exports that have helped trigger huge trade deficits between some countries and China.
China has repeatedly vowed to loosen its grip on the yuan as it moves towards full convertibility but it has rejected calls for a faster appreciation for fear of hurting its manufacturing sector, a key driver of its economy.