China close to yuan convertibility on capital account-Zhou

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China close to yuan convertibility on capital account-Zhou

China is not far from making the yuan convertible under the capital account, central bank governor Zhou Xiaochuan was quoted as saying on Saturday in an interview with a local magazine.

e Yuan banknotes are seen in this picture illustration taken in Beijing November 1, 2010. Photo: Reuters/Petar Kujundzic

"We are now not too far from our goal of capital account convertibility," Zhou told Caixin magazine.

The yuan exchange rate's fluctuation level will also widen in the future, he added.

On inflation, Zhou said the outlook had improved, and the task of fighting rising prices will not be as urgent in 2012.

Inflation appears to be cooling, having fallen from a three-year high of 6.5 percent in July to 4.2 percent in November, creating additional room for policy easing to support growth.

In a separate statement on its website, the central bank said it would maintain a prudent monetary policy.

China's yuan headed for a strong close to 2011 on Friday, touching a record high in early trade after the central bank set the mid-point at a fresh high, putting it on course to gain 4.5 percent for the year.

The yuan's gains for the year are in line with the 4 to 5 percent traders in the onshore market had expected at the start of the year.

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