China take cautious currency route

China’s premier has ruled out a faster rise in its tightly controlled currency to fight inflation, citing the possible impact on business and social stability.

Premier Wen Jiabao said today the government is taking steps to rein in surging inflation that pushed up consumer prices by 4.9% in February.

But speaking at a news conference, Mr Wen said the yuan’s rise against the US dollar would be kept gradual. A stronger yuan would cool Chinese inflation by making imported oil and other goods cheaper in Chinese currency terms.

“The appreciation of the Chinese currency should be a gradual process, because we must bear in mind its impact on Chinese businesses and our employment situation,” Mr Wen said.