RMB pre­dicted to sta­bi­lize

China Daily (USA) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

The ren­minbi will sta­bi­lize against the US dol­lar be­cause the Chi­nese econ­omy may have reached its bot­tom, Cao Yuanzheng, chair­man of BOCI Re­search Lim­ited and for­mer chief economist of Bank of China Ltd, said on Tues­day.

Al­though China ex­pe­ri­enced a con­tin­u­ous eco­nomic slow­down for 24 quar­ters, the growth of Pro­ducer Price In­dex has re­cently turned from neg­a­tive to pos­i­tive, show­ing an in­crease in Chi­nese com­pa­nies’ sales rev­enues and their abil­ity to pay in­ter­est on loans. Mean­while, the profit growth of in­dus­trial en­ter­prises is ac­cel­er­at­ing, also in­di­catin­gan im­prove­ment in com­pa­nies’ debt-re­pay­ment abil­ity, ac­cord­ing to Cao.

“We think the Chi­nese growth rate may have reached its bot­tom, so China will not ease mon­e­tary pol­icy fur­ther to give a large scale stim­u­lus to the econ­omy. That is, the pos­si­bil­ity for the cen­tral bank will cut in­ter­est rates and re­duce re­serve re­quire­ments is sig­nif­i­cantly re­duced. Un­der this mon­e­tary en­vi­ron­ment, the ren­minbi has no ba­sis for de­pre­ci­a­tion in the long run and will sta­bi­lize against the US dol­lar,” he said at the Ren­min­biWorld Con­fer­ence 2016, which was or­ga­nized by the Asian Banker, a Sin­ga­pore­based provider of strate­gic in­for­ma­tion on the fi­nan­cial ser­vices in­dus­try.

Fur­ther­more, big in­fra­struc­ture projects along the routes of the Belt and Road Ini­tia­tive will pro­vide a broader space for the use of the ren­minbi, which will be­come an im­por­tant, sta­ble cur­rency over the long term, he added.

Yang Bin, a se­nior executive at Shang­hai Pudong Development Bank Co Ltd, said: “Un­der the trend of the in­ter­na­tion­al­iza­tion of the ren­minbi, com­mer­cial banks are see­ing new op­por­tu­ni­ties in ar­eas in­clud­ing in­fra­struc­ture fi­nanc­ing, and cross-border ren­minbi as­set man­age­ment.”

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