China will allow investors in the northern city of Tianjin greater freedom to buy and sell currencies as part of moves towards a fully convertible yuan.
China’s State Administration of Foreign Exchange has approved Tianjin’s plan for “limited convertibility” of the yuan at the Binhai economic area, the city’s mayor Dai Xianglong said at a conference in Xianghe, outside Beijing. Tianjin will adopt a “floating foreign exchange mechanism,” he said.
The comments by Dai, a former governor of the People’s Bank of China, add to signs that the government will use a more flexible exchange-rate to cool the world’s fastest-growing major economy. A senior Chinese legislator today said 2008 may be “the right time” to allow full convertibility of the currency. [Full Text]