The yuan exchange rate will be more...........>

CHINA: The yuan exchange rate will be more flexible and its formation mechanism

will continue to be based on the market's supply and demand, Lu Lei, deputy

director of the State Administration of Foreign Exchange, said at a forum

entitled "Renminbi and the Foreign Exchange Market" in Beijing on Wednesday,

according to report in the  Economic Daily. Lu argued that China's financial

market is in transition and needs to further open up, and that its rules do not

completely dovetail with those of the international market, and so arbitrage

occurs in different situations. The "herd behavior" seen in China's financial

markets would be reduced if more market participants from both China and foreign

countries could engage in China's bond and currency markets, Lu noted. Investors

in onshore and offshore markets should be the same in the future in a bid to

avoid the obvious price spreads of the two markets, which trigger much of the

arbitrage, Lu said. (Economic Daily)