BEIJING (Reuters) - China will expand the yuan trading band in an orderly way and quicken convertibility on the capital account, the central bank said on Wednesday, reaffirming its long-standing stance.
In a statement published on its website, www.pbc.gov.cn, the People’s Bank of China also said it would steadily expand cross-border yuan usage.
“We will gradually perfect the renminbi (yuan) formation mechanism and expand the exchange rate’s floating range in an orderly manner,” it said.
The central bank has consistently flagged its intention to liberalise financial markets and allow the yuan to trade more freely. Central bank head Zhou Xiaochuan said in November that the PBOC would “basically” exit from regular intervention on the currency market.
The yuan’s trading band was last widened in April 2012 to allow the exchange rate to rise or fall 1 percent either side of the midpoint fixing announced daily by the central bank.
The yuan’s slow but steady appreciation against the dollar has attracted inflows to yuan-denominated assets in China and offshore centres such as Hong Kong, Singapore and London. The currency rose 3 percent last year and traders see similar gains in 2014.
HSBC expects the yuan to become fully convertible within five years. The currency has been on track to become the third largest trade settlement currency by 2015.
Reporting by Kevin Yao; Editing by Richard Borsuk