The decision announced by surprise also shows that the appreciation allowed by Beijing will be gradual.

“Given the recent economic situation of national and international markets, the Popular Bank of China decided to advance the reform on exchange rates of the renmimbi and increase the flexivility of exchange rates”. Said the central bank in a communicate.

In the text spread by Internet, the president of the Popular Bank of China, used the word “renmimbi”, that means currency of the people, instead of using “yuan”.

The declaration from the Chinese monetary authority is very different from recent expressions of the Government, that negated modifications on their monetary policy about exchange rates of the yuan and apposed against international pressures from countries believing that Beiging is keepig the yuan artificially low to help their exportations.

China won’t speak about the yuan

Some members of Chinese Government that will travel with the president, Hu Jintao, to the meeting of the G20 in Toronto next weekend, said last Friday that revaluation of the yuan wouldn’t be discussed there, “because it isn’t an international matter, but of Chinese sovereign”.

According the Popular Bank of China, because the world economy is in process of recovery, “is desirable” to advance in the reform of exchange rates, but also pointed that hasn’t arrived the moment of a big appreciation of renmimbi.

Beijing revalued the yuan in 2005 after years of being fixed at 8.2 yuans per dollar, during the next years, led id go up by 21% respect the dollar.

In July of 2008, fixed the new parity at about 6.8 yuans and then left the yuan without modifications due to the international financial crisis.

The United States celebrated the decision of the Popular Bank of China immediately, and the Secretary of the Treasury, Timothy Geithner, affirmed that the decision of increase the flexibility of exchange rate of the yuan can contribute positively to a bigger and more equilibrate economic growth.

According the Popular Bank of China, in a communicate showed today, the current level is placed at 16.5 percent for big companies and 14.6 percent for small ones.

The Popular Bank of China, in Hong Kong

However, the Popular Bank of China, said that the currency reserve for credit cooperatives and rural banks will remain steady to help the agricultural industry.

This is the third raise of the percentage of deposits that lenders must release from circulation since the beginning of the year, after the first raise past 18th of January and other the 12th of February.

The Popular Bank of China marked as objective for the 2010 restrict assets lended in 2010 to 7.5Billions of Yuans($1.1 Bn), in front of the 9.59 Bn of Yuans ($1.4Bn) in the past Year

The new adjustment of the ratio of th Popular Bank of China, was produced in the middle of a battle of Chinese Government to prevent a excessive liquidity in the economy, that is leading to the creation of speculative bubbles, specially in the real state market, and an a yearly increase by 2.7% in February.

However,th Popular Bank of China kept interest rates steady at 5.31% as has done last months.