CHINA reiterated the need to prevent one-sided moves in the yuan, as a resurgent US dollar and poor risk sentiment pressure currencies across Asia.
The nation will “resolutely” put the yuan back on track when traders place lopsided bets and it will also attempt to avoid excessive volatility, the People’s Bank of China (PBOC) said in a report on its social media account on Thursday (Apr 18). The Chinese currency slid to the weakest since November earlier this week on bets the US will not rush into cutting interest rates and the world’s second-largest economy will struggle to recover.
The yuan rose 0.1 per cent to 7.2349 per US dollar as at 10.23 am in Shanghai.
While the commentary was a reiteration of Beijing’s usual verbal warning against speculators, it underscores the authorities’ concern about wild swings in the yuan that may endanger financial stability. It also came as neighbouring Japan and South Korea expressed “serious concerns” over the recent weakening of their currencies and warned they make take steps to counter any drastic volatility.
China will make sure that its exchange rate is mostly determined by supply and demand, according to the PBOC report, which was originally published by Communist Party-backed People’s Daily and posted on a WeChat account run by the central bank. The yuan will be kept broadly stable, it said.
The PBOC released the report after studying a book by President Xi Jinping on China’s financial work, the PBOC said. The article also said the nation will maintain a prudent monetary policy and ensure the use of financial resources is efficient.
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On Thursday, the PBOC set its daily reference rate for the yuan little changed at 7.1020 per US dollar. Earlier this week, it unexpectedly weakened the fixing – which limits the currency’s moves by 2 per cent on either side – to allow moderate depreciation. BLOOMBERG
