China to Keep Yuan Stable, Policy ‘Moderately Loose’ (Update1)

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China to Keep Yuan Stable, Policy ‘Moderately Loose’ (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=atTfiiDoviXo&refer=home

By Li Yanping Last Updated: March 5, 2009 20:51 EST

March 6 (Bloomberg) -- China’s central bank reiterated a “moderately-loose” monetary policy for this year and said it would keep the yuan basically stable.

China’s exchange rate will be “‘basically stable at a reasonable and balanced level,” the People’s Bank of China said in a statement before a press briefing in Beijing today. The central bank will stick to the principle of “gradual” reform, it said.

China’s economy, the world’s third biggest, is growing at the slowest pace in seven years after a collapse in exports because of the global recession. A weaker currency could help exporters by making their goods cheaper in overseas markets.

China will “closely monitor” movements in major currencies and increase the market’s role in the exchange-rate mechanism, the central bank said.

The yuan has fallen 0.24 percent against the dollar this year after a 7 percent gain in 2008.