China Will Not Engage in Competitive Devaluation: Central Bank Governor Yi Gang

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The head of the People’s Bank of China (PBOC) has committed to maintaining the stability of the Chinese yuan as well as the continuation of ongoing exchange rate reforms just after the renminbi breached the key seven-to-the-dollar threshold.

“As a great nation which upholds its responsibilities, China will firmly abide by the spirit of commitment of previous G20 Leaders’ summits concerning exchange rate issues,” wrote Chinese central bank governor Yi Gang in a statement published by PBOC’s Financial Times.

“[China] will uphold a market-determined exchange rate system, refrain from engaging in competitive devaluation, refrain from using exchange rates for competitive ends, and will not make the exchange rate a tool for responding to trade disputes or other external interference.

“At present the Chinese economy is advancing amidst stability, and remains at the forefront of major economies in terms of economic growth, displaying its immense resilience, potential and its room to maneuver.

“Its balances of payments are balanced overall, its foreign reserves are ample, and it has an increasing number of hedging enterprises on forex markets.

“PBOC and the foreign exchange authorities will maintain the stability and continuity of forex policies, deepen reform and opening in the area of foreign exchange, and further increase the freedom and convenience of cross-border trade and investment.

“Irrespective of whether we look at the fundamentals of the Chinese economy or the balance between supply and demand on the market, at present the renminbi exchange rate is at appropriate levels.

“While it has recently been impacted by external uncertain factors, and the renminbi exchange rate has fluctuated, I am fully confident that the renminbi will continue to serve as a strong currency.

“The People’s Bank of China fully possesses the experience and capability to maintain the stable operation of forex markets, and keep the renminbi exchange rate fundamentally stable at a rationally balanced level.”

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