PBOC says sta­ble yuan likely soon

China Daily (Canada) - - VIEWS -

Cen­tral bank to press ahead with ef­forts to in­ter­na­tion­al­ize cur­rency

and has been more sta­ble re­cently,” said Pan, who is also a deputy gov­er­nor of the cen­tral bank.

The cen­tral bank re­leased a re­port on its web­site on Tues­day say­ing that the bank will con­tin­u­ally fa­cil­i­tate the yuan’s in­ter­na­tion­al­iza­tion to re­flect a more sta­ble po­si­tion in the global mon­e­tary sys­tem.

The PBOC also ex­pects yuan us­age to rise so that it can play a more im­por­tant role as a global re­serve cur­rency.

Prior to the mar­ket open­ing on Wed­nes­day, the yuan’s mid­point rate for daily trad­ing, or the ref­er­ence rate, was 6.5991 per dol­lar, which is slightly weaker than the pre­vi­ous fix­ing of 6.5883.

The sta­ble yuan, to­gether with pos­i­tive read­ings from the of­fi­cial pur­chas­ing man­agers’ in­dex this month, and ris­ing mar­ket sen­ti­ment fol­low­ing the cen­tral bank’s re­serve re­quire­ment cut on Sept 30, adds to the sense of sta­bil­ity ahead of the Party congress, Field­ing Chen and Tom Or­lik, econ­o­mists with Bloomberg, wrote in a re­search note.

A yuan rally to its high­est level since early 2016 at the start of the month may have prompted more for­eign ex­change con­ver­sion by dol­lar­cor­po­rates, they said.

Wang Youxin, an an­a­lyst with Bank of China, said mar­ket ex­pec­ta­tions for de­pre­ci­a­tion of the yuan’s ex­change rate have made a switch this year, as data show com­pa­nies and pri­vate sec­tor have greater ap­petite for set­tle­ment.

“China’s yuan has fully re­cov­ered from 2016 and has re­couped from last year’s loss,” he said.

De­mand for the yuan has risen in Au­gust, he said.

“Sup­ported by the coun­try’s im­prov­ing eco­nomic data, the cur­rency is ex­pected to re­main sta­ble till the end of the year,” he said.

“Im­proved mar­ket ex­pec­ta­tions pro­vide a fa­vor­able en­vi­ron­ment for press­ing ahead with re­form,” he added. “The gen­eral trend is to move to­ward a more mar­ket-based regime.”

It has been ex­actly a year since the In­ter­na­tional Mon­e­tary Fund in­cluded the yuan in its bas­ket of five re­serve cur­ren­cies, in ad­di­tion to the US dol­lar, the euro, the Ja­panese yen and the Bri­tish pound.

An­a­lysts also ex­pected an ac­cel­er­a­tion of the fi­nan­cial sec­tor open­ing-up af­ter the congress, by fur­ther free­ing cross-bor­der cap­i­tal flows to help strengthen the yuan’s global po­si­tion.

Con­tact the writ­ers at chen­jia@chi­nadaily.com.cn

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