China reiterated its commitment to maintaining the stability of the yuan amidst a challenging economic environment. The People’s Bank of China emphasized the need to prevent one-sided moves in the currency, as a resurgent dollar and poor risk sentiment continue to impact currencies across Asia.
The central bank stated that it would take decisive action to correct any lopsided bets on the yuan and avoid excessive volatility. This announcement comes as the Chinese currency recently weakened to its lowest level since November, reflecting concerns about the US interest rate outlook and the challenges facing China’s economic recovery.
Speaking at a press briefing, Zhu Hexin, deputy governor of the PBOC, reaffirmed the central bank’s determination to maintain the basic stability of the yuan’s exchange rate. The yuan was trading at 7.2391 per dollar, with the PBOC setting its daily reference rate at 7.1020 per dollar.
The PBOC’s comments underscore Beijing’s efforts to curb speculative activities in the currency market and ensure financial stability. The concerns over currency volatility were echoed by Japan and South Korea, prompting Treasury Secretary Janet Yellen to address the issue during a trilateral meeting of finance chiefs in Washington.
China’s commitment to allowing the exchange rate to be determined by market forces was highlighted in the PBOC report, which emphasized the importance of supply and demand dynamics in setting the yuan’s value. The central bank’s actions are closely watched by analysts, with some expressing doubts about the sustainability of its defense of the currency.
Despite the challenges ahead, China remains focused on maintaining a prudent monetary policy and efficient use of financial resources. The central bank’s efforts to stabilize the yuan reflect its broader commitment to ensuring economic stability and growth in the face of global uncertainties.