Despite the recent depreciation of the Chinese yuan against the U.S. dollar, China's central bank, People's Bank of China (PBOC), has pledged to ensure the stability of the currency exchange rate. The yuan has reached its weakest level since 2007 against the U.S. dollar, but PBOC reassured market participants on Monday, that it has the ability, confidence, and conditions to maintain the basic stability of the yuan exchange rate. The central bank also stated that it will "take action when necessary" to correct any one-way and pro-cyclical transactions and "firmly guard against the risk of exchange-rate overshot."
The assurance came during a special conference on the self-discipline mechanism of the national foreign exchange market held in Beijing on Monday. Representatives from relevant guidance departments of the foreign exchange market self-regulatory mechanism and eight core member institutions attended this meeting.
The conference discussed the recent foreign exchange market situation and the RMB exchange rate. Despite its depreciation against the U.S. dollar, it was noted that the RMB has remained basically stable against a basket of currencies. The RMB maintained a relatively strong position against major non-U.S currencies, operating steadily in the foreign exchange market, and was generally stable in market expectations.
The meeting highlighted that with domestic policies aimed at stabilizing the economy and stabilizing expectations being implemented, there have been positive signs in economic indicators. The year-on-year growth rate of prices (CPI) bottomed out and turned positive, import and export data were better than expected, real estate policies gradually took effect, consumption picked up significantly, scientific and technological innovation continued to break through, and high-quality economic development continued to advance.
The conference stressed that maintaining the basic stability of the RMB exchange rate is a common aspiration of financial management departments, members of the foreign exchange market, enterprises, and residents. The self-discipline mechanism of the foreign exchange market should continue to guide enterprises and financial institutions to establish the concept of "risk neutrality." Members of the foreign exchange market were encouraged to maintain market stability, carry out market-making and proprietary trading in an orderly manner, and put an end to speculation. Enterprises and residents were advised to adhere to "risk neutrality", not follow trends blindly, avoid unilateral gambling, and maintain property safety.
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