China talks up the value of yuan as Donald Trump’s trade war hits currency rate
- Head of the State Administration of Foreign Exchange says will keep the yuan stable at a ‘reasonable and balanced level’, despite tariff pressure
- Analysts now expect yuan to stay above the psychologically important level of 7.00 to the US dollar at least until midyear
China is unlikely to allow the yuan to fall below the psychologically important level of 7.00 against the dollar, at least in the near term, judging by statements made by its top foreign exchange regulator on Sunday.
Pan Gongsheng, chief of the State Administration of Foreign Exchange (Safe), said that the yuan’s value is strongly supported by the country’s economic and financial fundamentals. Pan talked up the value of the yuan at a time when an escalating trade war between China and the United States has soured market sentiment about its prospects and created downward pressure on the Chinese currency.
“We absolutely have the fundamentals, the confidence and the ability to keep China’s foreign exchange market stable and keep the yuan exchange rate at a reasonable and balanced level,” Pan, also a deputy governor at the People’s Bank of China (PBOC), said in an interview with Financial News, a newspaper run by the central bank.
The yuan has not breached the 7.00 threshold since the 2008 global financial crisis, but only because policymakers have cautiously kept the level in check.
