China to gradually liberalise exchange rate, says official

China was closely watching international capital flows and would gradually liberalise the renminbi exchange rate, Deputy Governor of the People’s Bank of China (PBoC) Ma Delun said in Mumbai today.

“Capital inflows have caused an imbalance in balance of payments. This added to the confusion over monetary policy. We are looking at stimulating domestic demand and our foreign exchange policy will play an important role,” he said.

Delun said inflation was a concern for China just as it was for India since the Chinese Consumer Price Inflation (CPI) had turned positive in July and recorded a growth of 0.5 per cent and 0.4 per cent in August and September, respectively.

“China is looking at striking a balance between inflation management and expectations of growth, and will closely watch other nations’ stimulus exit policies,” he said.

Speaking to mediapersons on the sidelines of the conference, Delun said the need for an alternative global currency had been mooted by many countries and China had also suggested International Monetary Fund’s Special Drawing Rights as one possible alternative. “The matter is still in the discussion stage,” he added.