China's central bank cools down yuan's falls

The governor of China's central bank has pulled out of the yuan's annual lows by ensuring that he will maintain his stable rating and at a balanced level.

The exchange rate of the Chinese currency against the dollar closed today at 6.64 yuan, a decrease of 340 basis points and a new minimum since August 2017.

Yi said in statements to the China Securities Journal financial newspaper that will use the necessary political tools and experience to "maintain the basic stability of the renminbi (yuan) exchange rate at a reasonable and balanced level".

He also said that the monetary policy of his institution will continue to be neutral and cautious, which will advance the reform of the exchange system and play an important role in macroeconomic regulation policies.

"There have been some fluctuations in the currency market recently and we are watching closely, mainly due to factors such as the strength of the dollar and external uncertainty, as well as some cyclical behavior" he explains.

The governor sent a message of tranquility to the market and defended the pillars of the Chinese economy.

In particular, he stressed that financial risks are controllable, that economic transformation accelerates towards a high-quality development model, that the external balance of payments is stable and that capital flows to countries are stable. other countries are balanced. 19659003] In 2005, China decided to decouple the dollar and has since applied a floating exchange rate regime with reference to a basket of currencies. "The effectiveness of the system has been proven for many years of practice, and we will continue to be ruled by" the former governor of the institution, Zhuo Xiaochuan, tried to bring the Asian country to abandon this system. promote the internationalization of its currency by trading yuan for dollars or other international currencies, but it was a proposal that did not get the support of the executive.

The fall suffered by the Chinese currency in recent days is linked to the commercial tension It is developing between Beijing and Washington, reflecting the mistrust of investors as to the impact that a tariff war could have on the economy. Asian giant's economy.

A weaker yuan could, in addition, offset customs duties on the import of Chinese products. that the United States will begin to apply from next Friday and will avoid a fall in the volume of Chinese exports.