China's currency exchange plans 'to boost global economy'

China looks set to introduce a more flexible system of exchange rate practices in the run-up to the G20 summit in Canada.

World leaders are set to meet in Toronto later this week.

Ahead of this, a spokesman for the People's Bank of China signalled that the country may bring to an end its practice of pegging its yuan to the US dollar.

Declining to lay out plans for a significant appreciation of the Asian dollar, the official stated that the central bank will start allowing market forces to start influencing the exchange rate.

The development has been largely welcomed by world leaders and top economists, many of whom feel the change to the existing exchange rate system, which has been in place for two years, will benefit the global economy.

"I hope it will have a positive impact on the Chinese economy, the Asian economy and the world economy," commented Japan's finance minister Yoshihinko Noda.

Over the first quarter of the year, the Chinese economy grew by 11.9 per cent, according to official figures.

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Posted by Chris Barber