WASHINGTON — The White House is encouraged by China’s promise to allow flexibility in its exchange rate but believes the real test will be how well the pledge is enacted, administration officials said Monday.
China on Monday began following through on its commitment to let its currency appreciate, following charges that the yuan has long been undervalued. The change could help U.S. manufacturers by making their products more competitive in China.
White House spokesman Bill Burton said “we’re obviously encouraged” but added the administration is monitoring the implementation.
Burton said currency will still be a topic at the G-20 summit of wealthy and developing nations in Canada this weekend as leaders strive for a durable economic recovery.
At a separate briefing, a senior administration official said China’s action was extremely important and had changed the dynamic for this weekend’s economic summit.
This official, who briefed reporters under ground rules that did not permit use of his name, said China had alerted the administration before it made its announcement Saturday that it planned to allow its currency to resume rising in value against the dollar.
After China’s central bank announced Saturday that it planned to introduce more flexibility into the management of its currency, the government allowed the yuan to rise to a record high against the dollar. In trading Monday, it took 6.7971 yuan to buy $1, an increase in the yuan’s strength of 0.4 percent from Friday, when it required 6.8272 yuan to buy a dollar.
The U.S. official who briefed reporters said the administration had urged the government of President Hu Jintao to take the step to avoid having China’s currency be a dominant point of debate at the G-20 summit.
