China’s yuan exchange rate ‘appropriate’ after recent weakening, central bank chief says

Depreciation ‘driven and determined by market forces and reflects shifts in market dynamics’, says People’s Bank of China governor Yi Gang

He was speaking at the International Monetary Fund’s annual meeting in Washington with currecny set to play a key role in any deal with the United States

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epa07865161 Governor of People's Bank of China (PBOC) Yi Gang speaks at a press conference on China's economic development ahead of the 70th anniversary of its founding in Beijing, China, 24 September 2019. China will celebrate the 70th anniversary of the founding of the People's Republic of China (PRC) on 01 October 2019. EPA-EFE/HOW HWEE YOUNG

Published: 12:18pm, 20 Oct 2019Updated: 9:38am, 21 Oct 2019

The exchange rate of the Chinese yuan against the US dollar is now at an “appropriate level”, with cross-border capital flows having remained balanced since the currency weakened past seven to the dollar in early August, the head of China’s central bank said on Saturday.

“Depreciation since the beginning of August has been driven and determined by market forces and reflects shifts in market dynamics,” and the currency had fluctuated in both directions, People’s Bank of China (PBOC) governor Yi Gang said in a statement to the International Monetary Fund’s annual meeting in Washington.

The statement suggesting Beijing is ready to maintain a stable yuan exchange rate comes as the United States and China seek to complete an interim trade deal that includes provisions seeking just such stability.

US Treasury Secretary Steven Mnuchin said last week that China had made renewed commitments on transparency and that the US was willing to review its August designation of China as a currency manipulator if details of the trade deal were finalised.

In August, the yuan fell below the psychologically important level of seven to the dollar – a mark the PBOC has previously defended – for the first time in a decade, promoting the US to accuse China of manipulating its currency. That deepened the trade conflict between the countries and the manipulator label has been a topic within the most recent negotiations aimed at easing tensions.