EU silent on Chinese currency move

BRUSSELS - The European Union has yet to react to comments made by China over the weekend that it is considering an end to the renminbi's unofficial peg with the dollar, in place since mid-2008.

European Central Bank officials declined to comment on the issue on Wednesday (10 March), a similar stance to that taken by the bank's president Jean-Claude Trichet earlier this week.

Mr Trichet said the Chinese currency issue was not discussed during a meeting of central bankers from industrialised and major emerging countries at the Bank for International Settlements in Basel on Monday.

"No, there was absolutely nothing on that. It was not discussed, but the position of a number of central banks and of a number of economies is very well known so there was not necessarily the need to discuss that," he told journalists after the meeting.

European finance chiefs including Mr Trichet and Luxembourg Prime Minister Jean-Claude Juncker, who chairs the monthly meetings of euro area finance ministers, have been vocal opponents of China's non-conventional monetary policy in the past, arguing that it undervalues the country's currency to the detriment of European exporters.

But various European initiatives, including a visit to China late last year by Mr Trichet and Mr Juncker ahead of an EU-China summit, have failed to produce the desired results, with Chinese officials restating the country's commitment to a stable currency policy.

The governor of the People's Bank of China, Zhou Xiaochuan, struck a more conciliatory tone on Saturday however, suggesting the renminbi's unofficial peg with the dollar was a "temporary" measure designed to combat the financial crisis.

"This is part of our package of policies for dealing with the global financial crisis," he said. "Sooner or later, we will exit the policies."

Mr Zhou was cautious about indicating when the bank could allow the renminbi to appreciate, however.

"If we say we withdraw from non-conventional policy and return to conventional economic policy, we must be very cautious and discreet in choosing the timing. This includes the renminbi exchange rate policy," he said.