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China could relax monetary policy

Monday, March 12, 2012 - 01:34

March 12 - China has ample room to relax monetary policy in order to reinvigorate the country's cooling economy, according to the Chinese central bank governor. Andrew Potter reports.

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Days after China posted its biggest trade deficit in a decade, the country's central bank says it will take a step back from intervention, and encourage the value of the yuan currency to be set by the market. (SOUNDBITE) (Mandarin) GOVERNOR OF THE PEOPLE'S BANK OF CHINA, ZHOU XIAOCHUAN, SAYING: "We will allow and encourage the market's demand and supply to play a bigger role. The degree of the central bank's participation and intervention in the market will decrease in an orderly manner." The yuan has appreciated 30 percent against the U.S. dollar since 2005. And, at $3.2 trillion, China has the world's largest foreign currency reserves. But it's struggled to manage them effectively. Some of those reserves are invested in the struggling euro zone. At its annual news conference the Central Bank says it wants to be more creative with that cash to get better results. (SOUNDBITE) (Mandarin) DEPUTY GOVERNOR OF THE PEOPLE'S BANK OF CHINA, YI GANG, SAYING: "We believe that Europe has the ability to overcome the debt crisis through its own resources and a certain degree of international help. In the future, we will continue to be, as we've always been, an investor in Europe and the European market." Some critics in the West say Beijing is still keeping too tight a grip on the yuan in order to aid the country's exporters. Lifting government restrictions could aid China's ambition of becoming a global financial centre by 2020. Andrew Potter, Reuters

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China could relax monetary policy

Monday, March 12, 2012 - 01:34