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Thursday, April 8, 2010

Yuan appreciation good for China, ASEAN - ADB

China's virtual currency peg was a good policy during the global downturn, but now appreciation of the yuan was in the interests of Asia, the head of the Asian Development Bank (ADB) said on Thursday.

"As a crisis response the Chinese exchange rate policy has been, I think, good for the Chinese economy as well as for the ASEAN economy," ADB President Haruhiko Kuroda told Reuters.

"But now the crisis is over, economies are recovering ... and I think it's in the interests of the Chinese economy as well as the ASEAN economies to see the Chinese currency become more flexible and appreciate," he said on the sidelines of a meeting of Association of Southeast Asian Nations (ASEAN) finance ministers.

The yuan has been effectively pegged to the U.S. dollar since July 2008, drawing criticism from abroad and becoming one of the biggest sources of tension in relations with the United States.

At the meetings in Nha Trang, officials said they have not discussed the yuan. Deputy central bank governors of the Philippine and Indonesian central banks said the yuan was not a big worry for the countries in Southeast Asia.

Kuroda said the dollar peg prevented it from possible depreciation alongside other currencies, which was beneficial to some of Asia's economies.

In recent months, though, Asian currencies have been on the rise, while the yuan has been stable at around 6.83 per dollar.

Kuroda said all Southeast Asian economies were recovering, but volatile, sudden inflows of capital could pose a challenge. Capital flows dried up during the downturn, but were now flowing back into emerging economies.

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