* China official paper says its time to widen yuan/dollar
* Analysts sees faster yuan appreciation, no clue to guess
* World Bank's Zoellick says yuan rise to help global
* Strong exports may curb fears that higher yuan hurts
(Add analyst comments, backgrounds)
By Fayen Wong and Zhou Xin
SHANGHAI/BEIJING, Aug 16 The time "is ripe" for
China to widen its yuan trading band, the state-owned China
Securities Journal said in a front-page editorial on Tuesday,
marking the latest call for a more flexible yuan from Chinese
commentators and state media.
"The conditions are ready for China to appropriately widen
the trading band between the yuan and the dollar," said the
paper, which is run by the official Xinhua news agency.
The yuan currently is allowed to rise or fall 0.5
percent a day from its mid-point price, which is set by the
central bank every trading day.
In practice, authorities have rarely allowed the yuan near
the lower or upper ends of that band.
But the country's central bank has fixed the yuan's
mid-point at record highs for five consecutive
trading days, leading analysts to speculate that Beijing may
give exchange rate policy a bigger role in helping curb
stubbornly high inflation.
"The yuan exchange rate has to become more flexible, and
widening the band is certainly on the cards," said Lang Qi, an
analyst with Huaxin Securities in Shanghai, adding that it was
not clear when the bank might make such a move.
"Even if the central bank widens the band, it would be more
of a symbolic move announcing that China is making another step
in yuan reform than a serious policy change since the current
band was rarely touched in the past years," Lang said.
World Bank President Robert Zoellick said on Tuesday that
the appreciation of China's yuan would be a positive in helping
restore global economic stability and tackling China's
"The circumstances have changed a little bit. And so as
China started to worry about its inflation rate, that led to
some balancing of the consensus in China to move towards
appreciation of the currency. That could help deal with some of
the inflation rate and is also a contributer, I think, to some
of the stability in the international system," Zoellick told
reporters in Australia.
Liu Zhaohui, a senior economist with GF Securities in
Guangzhou, said China faced additional pressure to accelerate
the yuan rise partly because of expectations of a further
weakning in the dollar.
Chinese researchers and even government officials have
previously argued that the band should be widened so that the
onshore yuan movement could be a little more volatile.
The China Securities Journal said the present trading range
has made the yuan inflexible and has also made the currency an
attractive speculation target, causing the economy to be flooded
with excess cash that is amplifying inflationary pressures.
The narrow trading band between yuan and the U.S. dollar in
the onshore market has meant that Chinese exporters are
reluctant to take more volatile non-dollar currencies in trade,
making it difficult for China to slow down dollar accumulation
in its foreign exchange reserves, the newspaper said.
The daily trading band between yuan and non-dollar
currencies, including euro and yen, is 3 percent in China's
onshore spot foreign exchange market.
In its latest quarterly monetary policy report published
last Friday, China's central bank repeated its usual wording on
exchange rate policy, reiterating that it would keep yuan
exchange rate basically stable.
But the pronouncement did little to quiet speculation that
Beijing would allow swifter yuan appreciation to help stem
STRONG EXPORTS MAY GIVE POLICYMAKERS MORE ROOM
Since China's exports were unexpectedly strong in the past
months, with a steady growth in the monthly trade surplus,
Beijing shouldn't have to worry about possible negative impacts
on trade from widening the band, the China Securities Journal
"It's not necessary to be overly concerned about impacts
from the debt problem in the United State and Europe as well as
global growth deceleration," it said.
"It's a good time window as well: since most international
investors already have enough trouble in hand to deal with,
(China's reform) will face less interference from speculative
The yuan rose was marginally firmer in spot trade on Tuesday
to 6.389. Beijing has allowed it to appreciate more than 3
percent so far this year and around 6.7 percent since depegging
it from the dollar in June 2010.
(Additional reporting by Rob Taylor; Editing by Kim Coghill)