Regulator warns Chinese not to ‘gamble’ on yuan exchange rate
Currency has gained about 9 per cent against the US dollar in a year
China’s forex regulator has warned residents and companies not to “gamble” on the yuan’s exchange rate, as the currency’s rapid appreciation raises concerns about its impact on Chinese exports.
The warning from Wang Chunying, head of the international payments department at the State Administration of Foreign Exchange, came after the yuan has gained about 9 per cent against the US dollar in the last 12 months.
That has fuelled talk that China is on a similar trajectory to Japan after it signed the Plaza Accord in 1985 – to weaken the US dollar against the yen, resulting in a sharp rise in the Japanese currency – when it was under pressure from Washington to cut its trade surplus.
In an interview with state news agency Xinhua over the weekend, Wang did not touch on trade tensions with the US, but said “the yuan has entered a stage of two-way fluctuation”. She said foreign exchange purchases should be based on real demand rather than speculation on the yuan’s future movement.
“Especially for companies, they should not use financial derivatives as a tool to make money,” Wang said. “Companies should have the awareness.”