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China ready to say goodbye to dollar

The head of China’s Central Bank has declared that the country is ready to end pegging its currency in dollars, but said that any changes would be gradual.

Zhou Xiaochuan, governor of the People’s Bank of China, described the decision as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy.

“If we are to exit from irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing,” Zhou said. “This also includes the [yuan] exchange rate policy.”

His comments come as the US administration accuses China of artificially keeping the value of the country’s yuan low.

“China and its currency policies are impeding the rebalancing [of the global economy] that’s necessary,” President Obama had told Bloomberg last month.

“My goal over the course of the next year is for China to recognize that it is also in their interest to allow their currency to appreciate because, frankly, they have got a potentially overheating economy,” Obama said.

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