No competitive devaluation of the yuan, said the people’s Bank of China
BEIJING (Reuters) – China will not make the yuan a tool for the management of disorders outside, such as trade disputes, said Monday Yi Gang, governor of the people’s Bank of China (pbc), after that the chinese currency was for the first time in 11 years down the threshold of seven yuan to the dollar.
China does not pursue a competitive devaluation of the yuan, said Yi Gang on the website of the central bank, adding that the authorities will ensure the stability and continuity of the exchange rate policy.
The exchange rate of the yuan is now at a level compatible with the economic fundamentals of China and the situation of the supply and demand on the market, ” adds Yi.
According to three sources aware of the folder, the monetary authorities have, however, allowed the yuan slip below the threshold of 7 per dollar so that the market finally integrates the concerns around the conflict of commercial sino-american and the weakening of global growth.
“We have had serious discussions internally, in particular on the time when to make our announcement, on how to guide the market, and we heard about it,” said a source to Reuters.
“The regulator being so tempted to let the yuan slip below 7 per dollar as of resist the temptation”.
The PCB has not made any comment on this issue.
A government advisor has said that the PCB had certainly prepared this descent of the yuan, but what has really triggered things this is the unexpected announcement by the us president Donald Trump of new customs duties.
The economic fundamentals have largely motivated the decision of the chinese authorities, according to another source.
“If your trade surplus decreases, all other things being equal, your currency will naturally weaken; this is not a impairment done purposely to support exports weakened,” said Yu Yongding, a former adviser to the PCBS.
“The yuan will not undergo a pressure dépréciatrice strong; we still have exchange controls and there was no need to worry. No intervention this means no impact on the foreign exchange reserves”.
The reaction of Donald Trump was not made to wait.
“China has dropped the price of its currency at a low, almost historic; it is called the ‘handling the money’. It means nothing to you, to the federal Reserve? It is a major violation, which weakens greatly the China in time,” said Trump in a tweet.
(Stella Qiu and Ryan Woo, Keith Zhai and Zheng Li, together with Susan Heavey; Wilfrid Exbrayat for French service, edited by Henri-Pierre Andre)