Friday, December 26, 2008

Yuan faces depreciation pressure: China official

China's yuan faces depreciation pressure because of global economic woes but the country's domestic strength should ensure that its currency remains largely stable, a statistics official said on Friday.

Wang Shaohui of the National Bureau of Statistics said on the agency's website ( that the deterioration in China's major export markets, the United States and the European Union, was a major source of downward pressure.

On top of that, weakening exchange rates throughout Asia have also weighed on the yuan, Wang wrote.

But Wang said that the yuan would be guided most of all by China's strong domestic economic fundamentals, making any large depreciation against the U.S. dollar unlikely.

"The renminbi must inevitably follow our country's economic development and maintain its strength," Wang wrote. "There is not a big possibility of large depreciation."

The yuan, also known as the renminbi, was at 6.84 per dollar on Friday. It has appreciated a further 18.63 percent since it was revalued by 2.1 percent to 8.11 per dollar on July 21, 2005, and freed from a dollar peg to float within managed bands.

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