CHINA NO TO CUR­RENCY DE­VAL­U­A­TIONS

PBoC sup­ply­ing liq­uid­ity is to pre­vent ex­ces­sive fluc­tu­a­tions, says forex head

New Straits Times - - Business -

BEI­JING

“China has no in­ten­tion of rais­ing com­pet­i­tive­ness via cur­rency de­val­u­a­tion. It does not have this wish, and it also does not have the need,” said Pan, who runs the State Ad­min­is­tra­tion of For­eign Ex­change.

China was work­ing hard to raise the ex­change rate’s flex­i­bil­ity and to main­tain its sta­bil­ity, he added.

This was good for the in­ter­na­tional com­mu­nity and would avoid neg­a­tive spillover ef­fects from a dis­or­derly ex­change rate ad­just­ment or com­pet­i­tive de­val­u­a­tions by other cur­ren­cies, said Pan, who is also a vice-gover­nor of the PBoC.

China’s yuan is up 0.6 per cent so far this year, hav­ing lost seven per cent last year.

In Novem­ber, the yuan hit an eight-year low fol­low­ing Don­ald Trump’s elec­tion as United States pres­i­dent.

In a poll last week, the yuan was fore­cast to weaken to 7.07 per US dol­lar in a year.

Mean­while, China’s for­eign ex­change re­serves rose last month for a third straight month, beat­ing mar­ket ex­pec­ta­tions, as cap­i­tal con­trols and a pause in the US dol­lar’s rally helped staunch cap­i­tal outflows.

Re­serves rose US$21 bil­lion (RM92.4 bil­lion) last month to US$3.03 tril­lion, com­pared with an in­crease of US$3.96 bil­lion in March to US$3.009 tril­lion.

The State Ad­min­is­tra­tion of For­eign Ex­change said in a state­ment the re­serves rose due to ba­si­cally bal­anced for­eign ex­change sup­ply and de­mand and the ap­pre­ci­a­tion of cur­ren­cies against the US dol­lar.

Look­ing ahead, the yuan would re­main sta­ble with cross­bor­der cap­i­tal flows be­com­ing more bal­anced, which would fur­ther sta­bilise for­eign ex­change re­serves, said the reg­u­la­tor. Reuters

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