MNI BRIEF: Yuan To Remain Stable, QDII To Expand: SAFE's Zhu

China’s foreign exchange market will remain stable, with the yuan operating at a “reasonably balanced level,” said Zhu Hexin, head of the State Administration of Foreign Exchange, adding that a new round of investment quotas under the Qualified Domestic Institutional Investor (QDII) scheme will be granted to meet demand for overseas investment.

Zhu said China is stepping up proactive policies to support economic recovery, stabilise foreign trade and investment, and deepen financial market opening. He noted that forex market participants are becoming more mature, with corporate FX hedging ratios and yuan cross-border settlement in goods trade both rising to around 30%, strengthening market resilience. (See MNI INTERVIEW: Yuan To Emerge As Regional Reserve Currency)

Despite global uncertainties, the yuan has appreciated 1.6% against the U.S. dollar this year and remained broadly stable against a basket of currencies. Cross-border investment is also rising, Zhu said, citing strong foreign net purchases of onshore bonds and renewed interest in domestic equities.