CHINA NO TO CURRENCY DEVALUATIONS

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

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