China pledges not to devalue yuan exchange rate after US currency manipulator designation
- The yuan was allowed to weaken beyond the key threshold of 7 to the US dollar last week for the first time in 11 years, drawing an unexpected response from Washington
- Foreign exchange administration chief calls currency manipulator decision last week by US President Donald Trump ‘a ridiculous case in global finance history’
China will neither devalue the yuan nor change the way it manages the Chinese currency exchange rate after the United States designated it as a currency manipulator last week, according to China’s foreign exchange administration chief.
But China will stick to its “managed floating exchange rate system” and keep the Chinese currency’s exchange rate “basically stable” despite Washington’s accusations that Beijing was manipulating the currency’s value for its own benefit, Pan Gongsheng, a vice-governor with the People’s Bank of China and the head of China’s State Administration of Foreign Exchange, wrote in an article published on Monday.
“China is a big responsible country. We adopted a responsible approach during the Asian financial crisis [in 1998] and the global financial crisis [in 2008],” Pan noted. “We will not engage in a competitive devaluation and won’t use the exchange rate as a tool to handle international trade disputes”.
China's central bank set the midpoint exchange rate at 7.0211 on Monday, the third consecutive trading day that Beijing has set a rate weaker than 7 to the US dollar. Onshore yuan was traded at 7.0584 against the US dollar, while the offshore yuan price in Hong Kong weakened beyond 7.1 on Monday afternoon.