SHANGHAI, June 4 (Reuters) - In July 2005, China bowed to market and political pressure by revaluing the yuan by 2.1 percent and abandoning its decade-old peg against the dollar.
In the three years following the revaluation, the central bank allowed the yuan to appreciate a further 19 percent against the dollar. The yuan’s traded peak since the revaluation was 6.8099, reached on Sept. 23, 2008.
However, since July 2008, the People’s Bank of China, the Chinese central bank, has effectively pegged the yuan against the dollar close to 6.83 to protect China’s economy as it confronted a slowdown due to the global financial crisis.
Pressures for China to renew the reforms, to allow the yuan to appreciate in line with its economic strength, have mounted again since late 2009 when global economies began to recover.
Here is a timetable of yuan reforms.
(For a related ANALYSIS [ID:nTOE64U07D])
1988 — China sets up semi-official currency swap centres around the country to allow enterprises to trade the yuan at a rate that more closely reflects market demand.
1994, Jan. 1 - China unifies its dual exchange rates by bringing the official and swap centre rates into line, officially devaluing the yuan by 33 percent overnight to 8.7 to the dollar as part of reforms to embrace a “socialist market economy”.
April - China sets up its first interbank currency market — the China Foreign Exchange Trade System — in Shanghai. The central bank intervenes in the market to keep the yuan stable.
1996, Dec. 1 - China allows the yuan to be fully convertible under the current account.
1994-1996 — The yuan strengthens steadily from 8.7 to the dollar to around 8.28.
1997-1999 — China wins wide praise for keeping the yuan stable during the Asian financial crisis despite pressure to devalue. The yuan was boxed between 8.2770 and 8.2800 for about three years through frequent central bank intervention.
2000 — The yuan is allowed to close slightly outside the firm end of its 30-basis point band, which is later widened by another 10 points to 8.2760-8.2800 against the dollar.
2001, December — China joins the World Trade Organisation and pledges to adjust its currency regime gradually.
2003 — International pressure begins mounting for the yuan to appreciate to help balance global trade, including China’s huge trade surplus with the United States and the rest of the world.
2004, Dec. 8 — Premier Wen Jiabao says that China would move gradually to a flexible currency regime.
2005, July 21 - China revalues the yuan by 2.1 percent and revises the rules governing its currency system, saying it had shifted to “a managed floating exchange rate based on market supply and demand with reference to a basket of currencies”. (For a FACTBOX on the system, please click [ID:nTOE64U07S]) (Reporting by Lu Jianxin and Edmund Klamann)