China’s central bank said on Thursday down the yuan’s reference rate by a further 1.1 per cent, to 6 401 against the dollar. The reports Bloomberg News.
The impairment is a step in the new currency policy means that the yuan’s exchange rate will be determined more by the market, where the reference rate is partly due to the previous day’s closing price.
No further weakening
There are kid basis for any further weakening of the yuan, given the strong economic fundamentals.
The writing’s Bank of China PBOC in a statement on the night of Thursday, reports Reuters.
According to the Central Bank gives China’s strong economic environment, persistent trade surpluses, sound public finances and large foreign reserves provide a “strong support” for the exchange rate.
The PBOC also said that they will monitor “abnormal” capital flows.
The PBOC’s deputy chief Zhang Xiaohui said at a press conference, according to Reuters and Bloomberg News, that the adjustment of the yuan as a result of the new calculation of the reference price is now “largely complete” . There is no basis means that the weakening would remain, the yuan can return to strengthen in the future and the central bank may keep the yuan basically stable.
Deputy Chief Yi Gang added that China may act in the currency market if it is “twisted” .
Zhang Xiaohui said that a rigid exchange rate is not sustainable or appropriate for China, and the country will speed up the process of opening its foreign exchange. China will respect the market exchange rate.
He dismissed media reports that it is in the government circles are those who want to see an overall weakening of the yuan with a total of 10 percent.
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