PBOC gives new hint at flexible exchange rate

The People's Bank of China said preparations had basically been made for introducing a flexible exchange rate but its implementation required caution to avoid volatility, state media reported. "We have already made a host of fundamental preparations and achieved active progress," the Financial News quoted PBOC Deputy Governor Li Ruogu as saying. According to the report, Li said reform efforts were aimed at devising an exchange rate mechanism that kept the yuan stable at "a rational level". His comments further raised speculation that Beijing could soon move towards the implementation of a market based exchange rate.