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China’s central bank chief signals phasing out currency intervention
- People’s Bank of China Governor Yi Gang spoke at a seminar during the International Monetary Fund and World Bank spring meetings in Washington
- Chinese leaders have pledged to step up support for the world’s second-largest economy
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China can phase out currency intervention by gradually reducing the amount and frequency of its forays into the market, the country’s central bank governor said on Saturday, underscoring Beijing’s resolve to keep up efforts to boost the yuan’s global presence.
People’s Bank of China Governor Yi Gang also said the central bank will seek to guide monetary policy so that real interest rates move slightly below the potential growth rate.
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“We have been trying to maintain the exchange rate stable for some time. If you go on forever, then one day I would say that markets would defeat the central bank,” Yi said in a seminar during the International Monetary Fund (IMF) and World Bank spring meetings in Washington.
“If you have the right monetary policy, I think you make sure the exchange rate is determined by the market and authorities intervene” as little as possible, he said.
While China reserves the right to intervene in times of market turbulence, authorities must allow market forces to drive yuan moves more, Yi added.
“Interest rate is the key and exchange rate is determined by market. That’s the basic message I want to get across,” he said.
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