The RMB exchange rate has not deviated from the fundamentals. Vice Governor of the People's Bank of China: Resolutely prevent exchange rate fluctuations in the market | Exchange rate | Vice Governor
The RMB exchange rate has fluctuated recently, and the market is very concerned about the exchange rate changes and future trends. On the 14th, Liu Guoqiang, Vice President of the People's Bank of China, stated that the People's Bank of China will aim to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, with expectation management as the core, comprehensively implement policies and stabilize expectations, and if necessary, correct market pro cyclical and unilateral behavior to resolutely prevent large fluctuations in the exchange rate.
Recently, the Chinese yuan has once again "broken 7" against the US dollar. "Although the RMB exchange rate has depreciated, it has not deviated from the fundamentals." Liu Guoqiang stated at the press conference of the State Council Information Office on the same day that the People's Bank of China has taken comprehensive measures to manage expectations. Currently, the foreign exchange market is operating steadily, and the foreign exchange settlement and sales behavior of financial institutions, enterprises, and residents is rational and orderly. Market expectations are basically stable. Recently, the exchange rate of the Chinese yuan against the US dollar has begun to show a significant rebound.
Liu Guoqiang believes that from the macro economic perspective, the fundamentals of China's economy have not changed in the long run. From the perspective of the overall international balance of payments, China's current account surplus remains at a moderate level of around 2%, and cross-border capital flows are basically balanced. Recently, foreign funds investing in domestic bonds have continued to maintain a net inflow trend. From the perspective of the reserve market, China has sufficient foreign exchange reserves and its balance still ranks first in the world. With the support of these three major markets, under the market-oriented exchange rate formation mechanism, the RMB exchange rate will not experience a "unilateral market" and will still maintain two-way fluctuations and dynamic equilibrium.
The exchange rate is generally determined by the market, and at the same time, it is necessary to better leverage the two hands of the market and the government to avoid large fluctuations in the exchange rate.
"We have confidence, conditions, and the ability to cope with various shocks and maintain the stable operation of the foreign exchange market," Liu Guoqiang said. In recent years, the People's Bank of China has accumulated rich experience in dealing with multiple rounds of external shocks, and also has sufficient policy tool reserves. We will use them reasonably and make timely decisions according to the situation.
