China to keep RMB exchange rate stable

Apr. 20, 2009 (China Knowledge) - China will adhere to its policy to keep the exchange rate of the Chinese currency basically stable at a reasonable and balanced level, said Jiang Yu, spokeswoman of the Foreign Ministry, at a press conference on Thursday.

China will continue its reform of the RMB exchange rate mechanism to achieve that goal, said Jiang, after the release of a U.S. Treasury report on Wednesday. The report denies that China has manipulated the exchange rate to increase income from international trade, but claims the RMB remains undervalued.

Jiang stated that keeping the RMB stable will not only be good for the Chinese economy, but also be beneficial for the whole world.

When answering the question whether China will continue to buy U.S. bonds, Jiang noted that China’s investment and management of foreign reserves will be in line with the principles of safety, liquidity, growth in value and diversity.

By the end of February, China’s holding in the U.S. bonds hit US$744.2 billion, sources said.