Chinese Central Bank Says Renminbi Will Be Kept “Fundamentally Stable”

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The head of the Chinese central bank has sought to reassure markets that the renminbi will be kept stable following recent volatility.

Yi Gang (易纲), governor of the People’s Bank of China, said to domestic media on 3 July that the central bank was paying close attention to recent volatility on forex markets, which he imputed to factors including the strength of US dollar as well as some pro-cyclical market behaviour.

The PBOC chief sought to reassure markets with regard to the health of the Chinese economy and the stability of the renminbi.

“China implements a managed, floating exchange rate system which has market supply and demand at its foundation, and makes reference to a basket of currencies when making adjustments.

“Many years of implementation have proven that this system is effective in practice, and needs to be maintained.”

Yi Gang said that China would “maintain the fundamental stability of the renminbi exchange rate at reasonably balanced levels,” as well as continue to implement stable and neutral monetary policy, deepens exchange rate marketisation reforms, apply policy tools which were proven, and effectively make use of the adjustment role of macro-prudential policy.

“At present China’s economic fundamentals are excellent, and financial risk is controllable overall. Transition and upgrade are accelerating, the economy is entering a high-quality growth phase, the balance of payments is stabilising, and cross-border capital flows are balanced in general.”

 

 

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