The strong appreciation of the yuan.....>

CHINA PRESS: The strong appreciation of the yuan exchange rate opens more leeway

for monetary policy so a required reserve ratio cut has become a policy option,

the 21st Century Business Herald reported Wednesday, citing Guan Tao, former

head of the balance of payments division at the State Administration of Foreign

Exchange (SAFE) and now a research fellow with the 40Forum think tank, and Ding

Zhijie, assistant president of the University of International Business and

Economics. The current upward momentum of the yuan exchange rate has several

positive effects, including curbing capital outflows and reversing one-way

depreciation expectations, Guan said. The yuan exchange rate's reference to a

trade-weighted basket of 24 currencies is just part of the transition to a 

floating exchange rate. The influence of a strong yuan on exports should be

dealt with in a market-oriented way and the financial market should not count on

the "counter-cyclic factor" to solve the problem, Guan noted. Cutting the RRR

remains a possible choice to inject liquidity and would be an important move to

normalize the currency policy, Ding said. (21st Century Business Herald)