The Governor of the People's Bank of China, Zhou Xiaochuan, said on Monday that the Yuan is approaching a fair value against other foreign currencies after the regulators allowed the currency to drop this year following a rise of 4.7% in 2011. This will allow the central bank to gradually reduce its intervention in the foreign exchange market.
After the US dollar rose as much as 0.4% against the Chinese currency until now this year, one dollar is now worth around 6.32 Yuan. The Governor also added during the press conference in Beijing that the market is now playing a bigger role in the exchange rate, and that more time is needed to confirm a trend for deficit.
The central bank has been keeping the Yuan within a tight range to protect the economy from the volatile exchange rates. Meanwhile the central bank's deputy governor, Yi Gang, said that his countrywill continue to make investments in Europe, since his country is confident in EU's ability to deal with the debt crisis.