Washington's Voz - Despite China yuan revaluation, critics persist

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Despite China yuan revaluation, critics persist

Washington / AFP
07/22/2005

US officials praised China's decision to implement a "managed float" of the yuan and abandon the currency's peg to the dollar Thursday, but the move failed to quell criticism of Chinese "currency manipulation."

"We are encouraged by China's announcement today that they are adopting a more flexible market-based currency system," said White House spokesman Scott McClellan after the announcement.

The currency was fixed at 8.11 yuan to the dollar compared to the old rate of 8.2765 yuan, effectively a two percent revaluation. China's central bank added it was scrapping the yuan peg to the US dollar and setting the Chinese unit against a trade-weighted basket of currencies, but did not reveal what these currencies were.

"China's full implementation of its new currency regime will be a significant contribution toward global stability," US Treasury Secretary John Snow said.
The treasury secretary said the shift was "good for China and it's good for the global economy. We'll obviously want to follow this closely. We're going to want to monitor it."

US Federal Reserve chairman Alan Greenspan said the move is "a good first step" and added that he sees "a number of further adjustments as they invariably increase their participation in the world trading markets ... so I think it's a good start."