From Reuters:
A faster rise in China’s yuan is quite possible, an adviser to the central bank said on Friday, adding that a stronger currency would reduce liquidity and make monetary policy easier to manage.
Yu Yongding said allowing the yuan to rise would mean banks would not have to sacrifice profitability as they did now by having to buy so many bills issued by the central bank to mop up liquidity caused by its attempts to stabilise the yuan.
Yu, who sits on the monetary policy committee of the central bank but stressed his comments reflected his personal view, said banks now had to buy central bank bills yielding about 2 percent. [Full Text]