By Garry White
In its third-quarter monetary policy report on Thursday, the People's Bank of China left out a standard phrase pledging to maintain the stability of the yuan and said that it would consider major currencies, not just the dollar, in guiding exchange rates. This prompted speculation that the government was about to allow its currency to strengthen against the dollar, after having pegged it to the US currency for more than a year.
However, a report on Saturday by Xinhua, the state-controlled Chinese news agency said that the government would not allow the currency to gain against the dollar in the short term.
Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong, said in a report to clients: "I consider this article an official effort by Chinese authorities to dismiss the renewed speculation of yuan appreciation in the near term."
The confusion occurred as US President Barack Obama begins a three-day visit to China. Last week, Mr Obama said in an interview with Reuters that he would bring up currency issues during the visit. He is expected to meet Chinese premier Wen Jiabao and President Hu Jintao, as well as meet Chinese children in Shanghai, as he attempts to increase bi-lateral ties.
China quashes talk of letting yuan strengthen
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