China Hints At Yuan Rise Ahead Of Obama's Visit

BEIJING (AP) — China signaled Thursday that it's ready to allow its currency to rise just days ahead of a visit by President Barack Obama.

China's central bank said in its quarterly monetary policy report that it will improve the yuan exchange rate formation mechanism by taking into account changes in major currencies and not just the dollar.

By omitting its often-used language of keeping the yuan "basically stable at a reasonable and balanced level," the bank is suggesting a policy shift on yuan's exchange rate, analysts said. Beijing has held down its currency for more than a year.

The comments came three days ahead of Obama's visit to China. The president has said he would raise the issue of China's currency during his trip.

"The reference to changes in major currencies could signal a shift from the current de facto dollar peg to include other currencies such as the euro and yen," Alaistair Chan, an associate economist of Moody's Economy.com, said in a note.

The yuan's appreciation started in July 2005. But after rising nearly 20 percent, the currency has hovered around 6.83 to the dollar for more than a year as China took measures to protect local exporters battered by the global economic crisis.