© Reuters. FILE PHOTO-A Note the Chinese yuan in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File Photo
BEIJING (Reuters) – China’s foreign exchange regulator said on Friday it will comprehensively use policy measures to stabilize market expectations at a time when the yuan currency faces renewed downward pressure.
The Chinese currency has lost about 4% against the dollar this year, and it is one of the worst performing Asian currencies, under pressure from widening yield differentials with the United States and signs of a faltering economic recovery. (CNY/)
Monetary authorities have responded to the yuan’s rapid losses in recent weeks by stepping up efforts to defend it by relaxing rules to allow companies to borrow more abroad and adjusting the daily standard, along with purchases of the yuan by state-owned banks.
“In the future, the yuan exchange rate will have the necessary conditions to basically maintain stability at reasonable and balanced levels,” said Wang Chunying, a spokeswoman for the State Administration of Foreign Exchange (SAFE).
“Tools are designed for use. We will adhere to comprehensive policies, focus on stable expectations, and take various measures based on actual conditions to provide the market with a stable environment and expectations.”
She said that previous rounds of external shocks provided the organizers with experience, tools and procedures to deal with such situations.
Wang emphasized that regulators will vigorously prevent sharp fluctuations in the exchange rate, while having the foundation, ability and confidence to maintain stable foreign exchange market operations.
Market participants view these official statements as verbal guidance against one-way bets on the currency, and the continued weakness of the yuan may prompt regulators to take more policy measures to support it.
It rose to 7.1702 per dollar, up from the previous night’s close of 7.1777.
Separately, the foreign exchange regulator said that foreign investors bought $79 billion worth of onshore yuan bonds in the first half of this year, reflecting the net outflows seen for the whole of 2022.
