SHANGHAI. Dec 31: Chinas central bank floated the idea of a looser foreign exchange regime in 2001 in a newspaper Friday, testing the waters for allowing a yuan fluctuation of as much as 15 per cent from its fixed rate, reports AFP.

"The People's Bank of China will consider allowing a more flexible yuan exchange rate, and widening the exchange rate trading band." the PBOC's Re search Bureau said in an article published in the official China Securities News.

The central bank is considering allowing the Chinese currency to float within a 10 to 15 per cent range either side of the rale set by the central bank, the paper said.

The yuan Is effectively

pegged to the US dollar at a rate of around 8.28 yuan, and Is only tradable on the current account in exchange for goods and sendees.

Pundits said financial markets have been expecting a more flexible exchange rate regime in mainland China for some time but few are predicting a wide yuan trading band.

"We exjiect to see a widening of the trading band next year, but I don't think they will go for a band of as wide at 10 or 15 per cent, five per cent is more likely because stability is the key consideration for the Chinese leaders." said Chi Lo. head of regional treasury research at Hong Kong's Standard Chartered Bank.