PBOC Reaffirms Commitment to Stability in Yuan Exchange Rate

The People’s Bank of China (PBOC) Deputy Governor reiterated on Thursday the central bank’s commitment to maintaining stability in the Yuan exchange rate, stating that they will strive to keep it “basically stable.” Emphasizing recent improvements in China’s economy as a supportive factor, the Deputy Governor expressed confidence in the PBOC’s ability to ensure stability in the forex market and prevent the formation of one-sided expectations regarding the Yuan.

In addition to these remarks, the PBOC has established a credit market department, underlining its proactive approach to financial market management. Another PBOC official emphasized the central bank’s vigilance towards inflation trends, highlighting the intention to maintain interest rates at appropriate levels while preventing them from falling too low.

The official also pointed out that high real interest rates in certain sectors could aid in controlling capacity and reducing inventories, indicating a nuanced approach to monetary policy.

Despite these statements, the market reaction remained subdued, with USD/CNY trading flat at 7.2368, slightly off its five-month high of 7.2405 at the time of reporting.

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