China’s central bank chief plays confident, longer-term game on yuan stability
Zhou Xiaochuan accuses hedge funds of trying reap rewards from market panic
Chinese central bank governor Zhou Xiaochuan sought to reassure the public on Friday that the yuan would remain stable, while lashing out at developed countries and hedge funds as sources of financial instability.
Zhou, governor of the People’s Bank of China, said China’s healthy economic growth and stable financial market meant there was no basis for depreciation of the currency.
“As the Chinese economy stabilises and becomes healthier, and the nation makes achievements in supply-side reforms and global investors become more confident in China’s economy, the yuan’s exchange rate will naturally be on a trend to stabilise,” he said on the sidelines of the National People’s Congress in Beijing.
The yuan has weakened by about 10 per cent against the US dollar since August 2015 when Beijing changed the way it calculated the exchange rate to better reflect market forces.
The yuan’s value against the US dollar fell last year as the greenback rallied on expectations of a US interest rate rise and hopes that US President Donald Trump would launch pro-growth policies. Confidence in the yuan was also undermined by concerns about China’s slowing economic growth and capital flight.
But Zhou said on Friday that suspicions about the yuan and the Chinese economy “went too far” last year, with some traders and hedge funds wanting to benefit from market panic.
