The Governor of the People’s Bank of China (PBOC), Pan Gongsheng, has announced that China is taking proactive measures to mitigate the risk of excessive fluctuations in the yuan exchange rate. This announcement comes against the backdrop of the yuan’s decline by more than 5% over the course of the year, positioning it as one of Asia’s underperforming currencies. The depreciation is attributed to the widening gap in bond yields between China and other nations, coupled with the uneven recovery of the Chinese economy.
Governor Pan’s remarks were made during a financial conference held in Beijing, where he emphasized China’s commitment to preventing unilateral movements in the yuan’s value and averting scenarios where market expectations dictate the currency’s trajectory.
Despite the yuan’s recent depreciation against the US dollar, Pan noted that the yuan’s stability remained intact when assessed against a basket of currencies. Furthermore, he highlighted that the yuan had exhibited strength relative to currencies other than the US dollar.
Governor Pan went on to underscore China’s capability to execute prudent operations within the foreign exchange market. He affirmed that, taking into account fundamental factors, the yuan would persist in maintaining stability at an appropriate level, preserving a delicate balance in the currency’s valuation.
China’s deliberate measures reflect the nation’s strategic approach to ensuring stability in its financial system and preserving the yuan’s reliability in the global market. As economic conditions evolve, these measures aim to secure the yuan’s role as a steady and dependable currency in international trade and finance.