Bernanke Urges China To Take More Currency Steps

Federal Reserve chairman Ben Bernanke said Feb. 16 China should take more steps to make its currency flexible and decouple the yuan from the dollar. The new Fed chairman made the comments in his second day of hearings on Capitol Hill, where he was presenting the semiannual economic outlook by the U.S. central bank.

"If you are asking me if I would advocate that the Chinese go to greater flexibility in their exchange rate, I certainly would," Bernanke said in testimony to the Senate Banking panel."It is in their own long-term interest to do so. It will give them more monetary policy independence, it will reduce the over-dependence of their economy on exports" and will allow China to assume a greater leadership role in global economic deliberations," Bernanke said.

China adopted new yuan trading guidelines last July, which allowed the yuan to appreciate from 8.277 to 8.066 against the U.S. dollar. Most of this move was in the one-time 2.1% revaluation on July 21.

Copyright Agence France-Presse, 2006

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