October 24, 2007 (LPAC)--"Supply and demand forces in the market will play a bigger role in setting the yuan's rate," Zhou Xiaochuan, governor of People's Bank of China (PBOC) said on the sidelines of the [17th] Party Congress said last Thursday, according to the China Daily.

On Tuesday, Oct. 23, this loosening took effect as the yuan was allowed to appreciate to over 7.5 per dollar (to 7.4938 yuan) driven by a widening trade surplus and flows of foreign investment into China, and away from U.S. securities.

As the currency rose to its highest since the central bank ended a fixed exchange rate in July 2005, U.S. Treasury Secretary Paulson, again, yesterday, said that "China needs to allow its currency to appreciate more rapidly."

Talking about recent complaints from European countries over the renminbi exchange rate, Central Bank Governor Zhou said worries may arise from rapid increase in China's trade surplus with the EU. He also said the weakening dollar was exerting upward pressure on the euro's value and expressed sympathy for those affected. He went on to say the free convertibility of the yuan under capital accounts will be eventually realized.

Jim Rogers, a former partner of George Soros, said he is shifting assets out of the dollar and into the yuan because "It's the official policy of the central bank and the U.S. to debase the [dollar] currency."