MNI BRIEF: PBOC To Keep Yuan Stable - Pan

The People’s Bank of China will correct any herd behavior and negative self-reinforcement in foreign exchange markets,  maintaining the stability of the currency, Governor Pan Gongsheng told a briefing on Friday. 

The yuan is in the middle of its range against the dollar of recent years, and has appreciated against the greenback since the beginning of this year due to China's economic recovery and a weakening dollar index, Pan said, adding that the yuan China has neither the need nor the intention to gain trade competitive advantage through currency depreciation.

Factors influencing exchange rates are complex and fraught with uncertainty, noting that the U.S-Israel attack on Iran has increased risk aversion, causing sharp fluctuations in the dollar index and major currencies. China's foreign exchange market has demonstrated greater resilience, he said. (See MNI: Yuan To Track Dollar Higher, Fixing Stable-China Traders)

The PBOC encourages financial institutions to provide services for enterprises to hedge exchange rate risks. Over 60% of China's foreign trade is less affected by exchange rate fluctuations, and this proportion will rise further this year, Pan said.