MNI BRIEF: PBOC To Work For Stable Yuan Exchange Rate

The People’s Bank of China will be on guard against the risk of excessive fluctuations in the yuan in order to keep it stable at an appropriate level, whilst still allowing flexibility in the exchange rate, according to an interview by Financial News with an anonymous official at the PBOC’s monetary policy department on Tuesday. 

There is a strong foundation for a stable yuan in the medium- and long-term based on a resilient economy and balanced international payments, the official said, noting that the exchange rate has remained steady despite shifts in the monetary policies of major economies over the past five years, with average annualised volatility of around 4% percent and two-way fluctuations becoming the norm.

The CFETS RMB Exchange Rate Index has hovered at around 100, and the yuan-dollar pair has remained stable compared with other major currency pairs, he said. (See MNI INTERVIEW: PBOC Should Be Flexible, Let Yuan Strengthen-Yu)