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China’s central bank said it will maintain the exchange rate of the yuan at “basically stable” levels after recent comments by its officials who suggested the currency be allowed to appreciate and authorities should eventually let up on controlling it.
The future trend of the exchange rate will be decided by supply and demand, as well as changes in international financial markets, Liu Guoqiang, vice governor at the People’s Bank of China, said in a Q&A segment posted on the bank’s website. The yuan will be kept at reasonable and balanced levels, he said.
The existing floating exchange rate regime is a suitable arrangement for China for now and ”a period of time in the future,” Liu said, without elaborating.
His comments came after a PBOC official said the country should let the yuan appreciate to offset rising costs of commodity imports. China is hurt by a rally in global commodity prices, according to central bank researcher Lyu Jinzhong, in an article published Friday in PBOC magazine China Finance.
Separately, Zhou Chengjun, director of the central bank’s finance research institute, said China has to give up its control over the currency’s exchange rate eventually if it wants to achieve greater global use of the yuan. Zhou added that the PBOC has made it clear it stopped regular intervention and will let the market play a bigger role in deciding the exchange rate. Zhou’s comments, made at a forum on April 16, was published by the organizer on Wednesday.
— With assistance by John Liu, and Jing Li
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May 23, 2021 at 11:00AM
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