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Bank Of China Chief Denies Rumors Of Yuan Devaluation

June 4, 1999

TOKYO (Nikkei)--Considering the current economic situation, there is no possibility that China will devalue the yuan, the head of the Bank of China told The Nihon Keizai Shimbun Friday.

Wang Xuebing, the bank's chairman and president who is in Tokyo to attend "The Future of Asia" conference sponsored by Nihon Keizai Shimbun Inc., denied rumors swirling around international financial markets Thursday that China is about to devalue its currency.

The bank, which mainly handles international operations, informed its client financial institutions Wednesday of a ban on remittances of yuan to China. The move raised concerns that conversion of the yuan to foreign currencies inside China will also be halted, which then gave rise to the devaluation rumors.

Wang said cost was the reason behind the decision to stop such remittances, and cited a decline in demand for them ever since commercial banks were authorized to handle foreign exchange operations. He insisted there would be no devaluation because China has vast foreign currency reserves.

The bank will set up later this year a special firm to dispose of its nonperforming loans, which Wang predicts will take seven years.

Some 10.29% of the bank's assets as of the end of 1998 were credit claims in arrears or irrecoverable, he said.

(The Nihon Keizai Shimbun Friday evening edition)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.