The Chinese central bank has defended recent depreciation of the renminbi amidst ongoing trade tensions with the United States, and says it is determined to keep the exchange rate on an even keel in future.
Speaking at a regular policy meeting of the State Council held on 26 October, People’s Bank of China vice-governor Pan Gongsheng (潘功胜) said that China possess ample tools and experience to deal with exchange rate volatility, as well as the ability and confidence to keep the renminbi “fundamentally stable at a rationally balanced level.”
Pan said that recent changes in the exchange rate were primarily a reflection of volatility in market supply and demand relations and international forex markets, and that any depreciation of the renminbi was primarily the result of a strengthening US dollar index as well a international financial market disruptions and trade frictions.
According to Pan the renminbi remains one of the steadier currencies amongst emerging market economies.
“We can make a comparison – since the start of the year the currencies of many emerging economies have seen sizeable depreciations due to the impact of shifts in external international financial markets.
“Making a horizontal comparison, the renminbi has had some depreciation, but remains a more steady currency, irrespective of whether we compare it to developed economies or the currencies of major emerging economies.”
Pan also said that PBOC would adopt measures to stabilise expectations, such as continually improving market-based mechanisms for determining the renminbi exchange rate and maintaining the elasticity of exchange rates.
It would also continue to actively adopt measures such as macro-prudential policies to stabilise forex market expectations, in order to target pro-cyclical actions on forex markets.