PBOC: Yuan won't be used to fight inflation
7 March 2008
The governor of China's central bank said that letting the yuan appreciate was not the most effective means of fighting inflation, the Wall Street Journal reported. Althougth the central bank is widely seen as an advocate of a stronger currency, Zhou Xiaochuan told reporters that "domestic policies" would be used to combat inflation and that there was "no need" for exchange-rate reforms. He admitted that faster currency appreciation helps keep consumer prices in check but said the actual impact was limited. Zhou's statement appears to runs counter to expectations that the yuan would be allowed to appreciate in order to keep pace with the highest inflation rate seen in a decade.
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