China hints that could allow yuan appreciation

BEIJING (Reuters) - China will keep the yuan basically stable at the time but exporters warned over potential risks in order to minimize their losses, said a powerful central planning agency in a statement reported Wednesday.

The National Development and Reform Commission gave no further details on risks related to, but the wording of the text hints that China would be willing to resume the yuan's appreciation after hold it in place since mid-2008 to protect its exporters.

In another sign that Beijing may be approaching a consensus on the appreciation of its currency, the central bank set the yuan's daily average, its key benchmark rate at 6.8259 against the dollar, its highest since May last year, but even within the narrow range of the past 20 months.

"We should keep the yuan stable at a reasonable and balanced level, while strengthening the monitoring and analysis and make timely announcements on risks to reduce losses of exporters," said the agency, widely quoted as saying by the official China Securities Journal publication.

The agency has a preponderance over almost any other government agency, including the central bank, in the process of making decisions on the currency.

After a series of "stress tests" to examine how exporters would deal with an appreciation, your comments are a strong indication that the Government wants to warn firms to prepare for a stronger currency could erode their margins weak gain.

The speculation that Beijing might allow the yuan begins to appreciate in the coming months has been revived after the currency tensions between China and the United States appeared to soften in recent days.

The U.S. Treasury secretary, Timothy Geithner, said over the weekend that would postpone a report that was going to release on April 15 on whether China manipulates its currency, on the eve of a visit by Chinese President Hu Jintao.

Deputy Minister of Foreign Affairs of China, Cui, declined to say whether the two countries will discuss the yuan in Washington, where Hu will attend a nuclear safety summit on 12 and 13 April.

Cui said the United States and China had "different views" on financial and economic issues, but they shared "broad common interests." He added there would be "an in-depth exchange of views on a wide range of issues."

The White House said on Tuesday that President Barack Obama would raise the issue of the yuan to Hu on sidelines of the summit.

The yuan rose slightly on Wednesday in the spot market, reaching 6.825 against the dollar, its highest in 2010.

(Additional reporting by Kevin Yao, written by Simon Rabinovitch; edited by Hernan Garcia in Spanish)