Jan. 28, 2011, 2:05 a.m. EST
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — The currency basket China uses as a gauge for setting the value of the yuan is made up of about 20 currencies, split equally between those of developed and emerging economies, China’s top central bank was quoted as saying in a state-media publication.
People’s Bank of China Gov. Zhou Xiaochuan offered the rare glimpse into China’s currency policy in an interview with the central bank journal “Financial News,” which was quoted widely in news reports from the region. However, he didn’t specify which currencies are used or how they are weighted.
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China regards the composition of its currency basket as a state secret. Friday’s disclosure marks a departure from protocol established in 2005, when the central bank dropped its peg to the U.S. dollar in favor of a system that allows a crawling appreciation of the yuan from a mid-point that it sets daily.
In separate remarks to state television, Zhou referred to the need for ongoing reform, even as he reiterated the current policy of keeping the yuan’s exchange rate basically stable while improving the flexibility of the currency regime, according to a Reuters report.
“China’s development model has to be changed, and China’s monetary policy has to adjust accordingly,” Zhou was quoted as saying.
Chris Oliver is MarketWatch’s Asia bureau chief, based in Hong Kong.