Experts: China's yuan may participate in the formation of reserve major central banks of the hard currency

May 13, 2014
Shanghai - AFP: Experts said the Chinese currency (the yuan), which accommodates use beyond national borders, may fall later in the basket of currencies that make up the foreign reserve major central banks, but Beijing will have to intensify financial reforms to achieve this.

The subject of converting Chinese yuan tightly controlled communist authorities are keen to avoid the flow of capital at random, and do not allow the volatility of the exchange rate of the national currency only within a limited margin.

But Beijing does not hide its intention to have its currency to-day role on the impact of growing globally ambitious reforms to liberalize the financial transactions in the country.

These reforms, which do not have any specific timetable for completion, delayed application of what the chagrin of Washington. The 'progress on the reform agenda in China' on the agenda of talks took place on Tuesday in Beijing between U.S. Treasury Secretary Jacob Lew and Chinese Prime Minister Li Zhi Qiang.

Liu said 'it is important that China clearly confirms its commitment to the adoption of market-determined exchange rates and transfer system more transparent'.

Beijing's efforts focused particularly on the Hong Kong to make them the center of external transactions 'Offshore' for yuan-denominated swaps.

In April / May announced the agreement allows investors from mainland China using the yuan to invest in the Hong Kong Stock Exchange. As the Free Zone, which was launched last year in Shanghai will be 'laboratory' for the free transfer of the yuan as authorities said.

And the walls of said Prasad, a professor at Cornell University in the United States' clear that the national currency thriving. The march is very clear in relation to Ptdwylha '.

According to Prasad, who took over the presidency of the circle in the past China in the International Monetary Fund 'If China continues to apply the financial and economic reforms of the yuan will become a reserve currency and a permanent mission' in the rest of the world.

He added that some central banks, including banks, Nigeria, Chile, South Korea and Japan, has a coin tray in reservoirs that demonstrates the importance of economic and trade relations of these countries with the Asian giant.

Because of Beijing to control its currency, the yuan more stable than most of the foreign exchange world. Has improved the exchange rate of the yuan is significantly against the U.S. dollar in 2013 before retreating in recent months.

Analysts emphasize that this is due to the central bank to try to address the work of speculative funds betting on improving the rate of the yuan.

Nor can the exchange rate that changes every day, but the rate of 2 'rise or fall of the price set by the central bank daily. Said Jiang Shu, an analyst at 'Andastrellal Bank' Chinese he 'average rate reflects the direction that you want the government and its intentions.'

Prasad said that he therefore can not be for China to compete with the independence and transparency of American institutions, and that the yuan could become a tool for diversifying reserve currencies' but it is unlikely to become a 'reserve currency'.

The decline in the value of the yuan since the beginning of the year been resented by some of the major trading partners of China, who considered that the currency was before this decline undervalued real what was the benefit of Chinese exports, which become more competitive.

In April / May, said the U.S. Treasury 'even though there was a clear intention (by the government) to increase the volatility of the yuan in both directions, but the recent developments raises serious concern'.

But Beijing believes that these fluctuations 'is normal'. Guan Tao said the administration official in charge of the currency market 'in the history of money have never seen coin improve regularly without falling value at all.'

Prasad said, 'Yuan attracts. China's economy may catch up with the United States during the 10 to 15 years, so the expected long-term investments in yuan '.

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