China confident of keeping yuan stable
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E-mail Xinhua, August 6, 2019
China's central bank on Monday reiterated that it is confident in its capability of keeping the yuan's exchange rate basically stable after both the onshore and offshore yuan broke seven against the U.S. dollar.
The People's Bank of China (PBOC) attributed the weakening of the currency beyond 7 yuan per U.S. dollar Monday to factors including unilateral and protectionist measures, as well as the expectation of additional tariffs on Chinese goods, according to an online statement.
Responsive to market forces
The U.S. threat of imposing an additional 10 percent tariff on 300 billion dollars worth of Chinese goods starting Sept. 1 disrupted market expectations, causing global stock and foreign exchange markets to slump, said Zhang Yansheng, a researcher with the China Center for International Economic Exchanges.
"China is the victim of U.S. trade bullying," he added.
Wang Youxin, a researcher with the international financial research institute under the Bank of China, regarded the yuan devaluation as a normal response to external changes.
"The additional tariff hikes on Chinese goods will undoubtedly bring shocks to China's exports and forex revenue. Thus, it is in line with expectations that the yuan's exchange rate fluctuates in accordance with external changes," Wang said.
Remains a strong currency
Despite recent weakening, the yuan has strengthened 20 percent against the dollar over the past two decades, the strongest among major currencies in the world.
The yuan remained basically stable and strong against a basket of currencies, with the China Foreign Exchange Trade System yuan exchange rate composite index up 0.3 percent since the beginning of the year.
Although the yuan's central parity rate had weakened about 0.53 percent against the dollar by Friday, its depreciation was much smaller than those of the Korean won, the Argentine peso and the Turkish lira.
"Seven is just a number. It is normal to rise and fall," said Bai Ming, deputy director of the International Market Research Department under the Ministry of Commerce.
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