China's Zhou: Yuan Policy Could Change

The chief of China's central bank reportedly suggested that the nation may decide to let its currency rise vs. the dollar, but he gave no clues as to when that might happen.
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BEIJING (TheStreet) -- The chief of China's central bank reportedly suggested Saturday that the nation may decide to let its currency rise vs. the dollar, but he gave no clues as to when that might happen.

At a news conference Saturday, Zhou Xiaochuan, the governor of the central bank, acknowledged that China has been using exchange-rate controls, which hold down the value of the yuan against the dollar, as part of measures the country is taking to weather the global economic crisis.

"Under crisis conditions, we do not rule out the possibility of adopting special policies, including special foreign exchange mechanism. This is part of the package of policies to deal with the global financial crisis," Zhou said, according to the

AP

.

He said such a policy would be "withdrawn sooner or later," but added that current economic outlook was still uncertain, the

AP

added.

"If we say we withdraw from nonconventional policy and return to conventional economic policy, we must be very cautious and discreet in choosing the timing," Zhou said, according to the

Associated Press

. "This also includes the renminbi exchange rate policy."

Renminbi is another name for the yuan.

China has come under fire for depressing the value of its currency, a policy that boosts its exports by making their prices more attractive. President Obama last month said his administration would get tougher with China in trade disputes, the

AP

noted.

Beijing kept the value of the yuan tied to the dollar for decades, but the government ended that link in 2005 and allowed the currency to appreciate about 20% through late 2008, the

AP

noted. Since then, China has held its currency steady against the greenback.

This article was written by a staff member of TheStreet.com.