China lifts currency basket lid

China has revealed for the first time which international currencies it uses to measure its own yuan currency by.

The US dollar, the euro, the Japanese yen and the South Korean won dominate a basket of currencies introduced last month after China revalued the yuan.

China's currency had been pegged at 8.28 against the dollar for a decade, but the adjustment allowed it to float against a number of currencies.

The basket also contains the UK pound, the Thai baht and the Russian rouble.

Trading partners

The contents of the currency basket had remained a secret since China's decision to revalue the yuan on 21 July, effectively strengthening it by 2.1% to 8.11 to the dollar.

Since then, the yuan has appreciated slightly on China's restricted foreign exchange market, closing at 8.1062 to the dollar Wednesday.

"The currencies in the basket depend on the amount of foreign trade we conduct. The US, eurozone, Japan and South Korea are our biggest trading partners now," said People's Bank of China governor Zhou Xiaochuan.

However, the announcement by Mr Zhou surprised some analysts for its omission of the Taiwan dollar.

Separately, China announced further currency market reforms following last month's decision to decouple the yuan from the dollar.

The bank said it was allowing non-banking firms to trade in its onshore foreign exchange market, and was also launching forex (foreign exchange) forwards on the domestic interbank market.

China has been under pressure to liberalise it currency markets, with many critics, particularly in the US, arguing that a cheap yuan has unfairly helped Chinese exports.