By Andrew Jay Rosenbaum
ANKARA
Chinese authorities have taken steps to keep the renminbi from falling too far against the dollar and other major currencies.
On Friday, the People's Bank of China (PBoC) fixed the value of the renminbi higher against the dollar by 0.05 percent, after having devalued the currency by a total of about 5 percent over the past three days.
The daily reference rate was set at 6.3975 to the dollar, from 6.4010 on Thursday. The renminbi had fallen Thursday to 6.3982 to the U.S. currency.
The PBoC also gave a press conference yesterday, expressing commitment to a policy of arresting the fall of the renminbi.
"From the international and domestic economic and financial situation, we can see that there is no basis right now for continued depreciation of the renminbi exchange rate. The central bank has the power to maintain the stability of the renminbi and to ensure that it remains at a reasonable and balanced level," Zhang Xiaohui, assistant governor of the PBoC. told the press.
The central bank also intervened in the market directly on Thursday, using dollar reserves to support the currency.
In a note published on Tuesday, after the first devaluation of 2 percent was announced, the PBoC said that monetary policy would now allow the currency to float and trade more freely, in a move towards a more market-orientated approach. The PBoC fixes the value of the currency to the dollar every morning, and then allows it to trade within a 2 percent band.
The move to a more "market-oriented" policy, the PBoC is eyeing the possible inclusion of the renminbi in the International Monetary Fund's Special Drawing Rights (SDR) currency. Inclusion would be an important step for the Chinese currency in obtaining recognition as a reserve currency.
The IMF welcomed the move Tuesday, and indicated that it could help to bring the renminbi into the SDR basket.
