Advertisement
Yuan
EconomyChina Economy

China’s yuan volatility prompts intervention warning to big banks: end the ‘big rises and falls’

  • Foreign-exchange regulators’ comments come after Chinese currency’s recent weakening below 7 per US dollar
  • Authorities say they will guide expectations, correct behaviours and curb speculation

Reading Time:2 minutes
Why you can trust SCMP
2
A recent weakening of China’s yuan came as April economic data showed a broad slowing of economic activities. Photo: Reuters
Frank Tangin Beijing
China’s forex regulators have told major banks to help curb the yuan’s “big rises and falls”, as the currency’s exchange rate against the US dollar weakened below a key psychological threshold of 7 per US dollar in recent days.

The instructions were issued during a Thursday meeting of the China Foreign Exchange Committee, a mechanism led by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) and composed of major state-owned financial institutions and foreign-funded banks.

The authorities will enhance supervision, management, monitoring and analysis of the exchange-rate movements and forex-market operations, and they will “guide expectations, correct pro-cyclical and unilateral behaviours when necessary, and curb speculation”, according to a statement posted on the central bank’s website.

The meeting was chaired by deputy central bank governor Liu Guoqiang and attended by Wang Chunying, deputy head of the SAFE.

The weakening of the Chinese currency came as April economic data showed a broad slowing of economic activities, including industrial production, consumer goods sales and property.

Japanese investment bank Nomura accordingly cut its estimate for China’s economic growth this year to 5.5 per cent from 5.9 per cent.

Despite market concerns, financial regulators have tried to talk up market sentiments, saying that the national economy continues to improve with more positive factors and signals.

Advertisement