BEIJING, May 3 (Xinhua) -- China and the United States agreed on Thursday that the exchange-rate regime should be decided by market supply and demand.
Zhou Xiaochuan, governor of the People's Bank of China, made the remarks at a press conference on the sidelines of the ongoing China-U.S. Strategic and Economic Dialogues (S&ED) in Beijing.
China and the United States discussed the exchange rate of Renminbi(RMB) at the Economic Dialogue of the fourth round of the S&ED, confirmed Zhou.
He said the RMB exchange rate has had a tendency of appreciation when China had a large trade surplus in the past, and then the market supply-demand relationship also sent a signal of appreciation.
However, the central parity of the RMB against the U.S. dollar has fluctuated in a two-way manner in the forex market since last August, when some countries' sovereign debt problems soured market confidence and affected market supply-demand relations in China, according to the banking chief.
In a previous interview, Zhou said the unbalanced nature of China's international payments has improved. In 2011, the ratio of the current account surplus to GDP dropped to 2.8 percent.
He said that supply and demand in China's forex market was approaching a balanced level and the RMB exchange rate has also approached equilibrium.
When asked to comment on his previous remarks, Zhou said if the RMB exchange rate remains unbalanced, market supply-demand relations will correct it.
In response to a question on interest rate marketization, Zhou said the price formation in the financial market should also be decided by market supply and demand, which is conducive to optimal allocation of resources and the development of the financial market. < The marketization of interest rates in China is a gradual process, because the price of interest-rate products has been limited by many factors, said Zhou, adding China will continue to push forward reform in the financial market.
According to Zhou, China and the United States mainly discussed issues concerning the global financial crisis, fiscal and monetary policies, the development of the financial market and reciprocal financial market access at the Economic Dialogue.
The dialogue was co-chaired by Chinese Vice Premier Wang Qishan and U.S. Treasury Secretary Timothy Geithner.