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U.S. and China cooperate on yuan exchange rate

U.S. and China will cooperate on making yuan exchange rate responsive to market forces

As reported by Reuters, Washington and Beijing will cooperate on making the yuan's exchange rate more responsive to market forces of supply and demand, said visiting President George W. Bush on Sunday.

China revalued the yuan by 2.1% in July and cut it loose from the dollar so it could float within tightly managed bands. Since then, to Washington's frustration, China has let its currency rise only a further 0.33%  against the dollar. Bush said he applauded the July reform.

"I also reminded the leaders that we've seen some movement but not much in the currency valuation," he told reporters after his meetings with Chinese officials. "And I explained to them as clearly as I could that the value of the Chinese currency is very important for manufacturers and workers in the United States."

Earlier, at a joint news conference with Chinese President Hu Jintao, Bush said: "We'll continue to work with China to help implement its July commitment to a flexible, market-based currency".

Without giving details, Hu said China would press ahead with the reform of the yuan and "join hands" with the United States to gradually restore balance in trade between the two countries.