PBOC open to further RMB rise

The People's Bank of China (PBOC) fueled expectations of a further currency appreciation Wednesday as its second quarter monetary report said the exchange rate could play a role in addressing international payments imbalances, the Financial Times reported. The report was released shortly before China announced that the trade surplus had risen for the third month in a row. However, the PBOC said imbalances could "certainly not be resolved solely by relying on exchange rate appreciation", stressing that "appropriate use" would be made of currency movements "as part of a packet of measures". It has been rumored in recent weeks that the government was considering a bolder approach towards exchange rates after a year of tight controls since unpegging the yuan from the US dollar a year ago. The yuan has risen just 1.66% against the dollar since the 2.1% revaluation last July.