Ｃｈｉｎａ Ｎｏ Ｌｏｎｇｅｒ Ｐｅｇｇｉｎｇ Ｇｕｒｒｅｎｃｙ ｔｏ ＵＳ Ｄｏｌｌｅｒ

China scrapped the yuan's pegto the U.S. dollar and tied itto a basket of currencies， thenaton's central bank said， the first stepsin highly anticipated reforms aimed atletting the currency float freely.

The yuan currency has beenstrengthened， effective immediately， toa rate of 8.11 to the U.S. dollar - com-pared to the 8.28 it has been set at formore than a decade. The new tradingregime will begin Friday， the govern-ment said in an announcement on statetelevision.

The yuan will now be allowed totrade in a tight 0.3% band against a bas-ket of foreign currencies， the govern-ment said. It didn't say whichcurrencies.

It said the central bank would an-nounce the yuan's closing price eachday， and that rate would be the mid-point of the next day's trading band.

Meanwhile， China's central bankdenied the possibility of further yuanappreciation after it allowed the cur-rency to rise 2% in value against theUS dollar a couple of days ago.

The 2% appreciation refers to anadjustment at the beginning of reformon the yuan's exchange rate determi-nation mechanism， a spokesman forthe People's Bank of China (PBC) said.

\"It does not mean that there willbe further revaluation (of the yuan)afterwards，\" the spokesman said in a\"solemn statement\".

It is an \"important prin-ciple\"for the yuan's reformto be conducted \"step bystep\"， which refers to thegradual process in the er-form of the rate's deter-mination mechan，instead of its level，heacknowledged.

The spokesmasaid the 2% appre-ciation level wascalculated out\"on a rationalequilibrium\".

The increase basically caters to theneed of materializing the overall bal-ance in commodity and service tradeas it was set in line with the extent ofsurpluses and structural adjustment inChina's foreign trade， as well as thebeating capacity of domestic firms， hesaid.

Some developed countries， typi-cally the United States， argued that theyuan was artificially low， giving Chi-nese exporters an \"unfair\"tradeadvantage.

The PBC spokesman said a smallnumber of overseas media made mis-understanding on China's exchangerate reform， especially the adjust- ment of the yuan's valueagainst the dollar.

They even \"wrongly\" be-lieve that the 2% apprecia-on of the yuan is just an ini-iai adjustment，\"which willtrigger the expectation onfurther rate hikes，\"he said.

The media shouldkeep a \"responsible\" at-titude towards their re-ports and carry \"objec-tive\" stories， thespokesman said.