China’s yuan gets stronger as regulators warn against speculative bets on the currency
- The People’s Bank of China says it will crack down on speculation in the foreign exchange market following recent gains by the yuan
- The currency has advanced by 1.6 per cent against the US dollar since May, with many analysts expecting it to strengthen further
The People’s Bank of China (PBOC) on Thursday said the exchange rate cannot be used as a tool to boost exports or offset the high price of commodities, while warning against speculation.
The yuan has advanced by 1.6 per cent against the US dollar this month, with many analysts expecting it to strengthen further in coming months, fuelling concerns it could weigh more on Chinese exporters.
Tan Yaling, head of the China Forex Investment Research Institute, said more shocks could arrive as the US dollar weakens, which would demand stronger government interference for the health of the economy.
The current level is not supported by economic fundamentals at all
“The current level is not supported by economic fundamentals at all. The competitiveness of Chinese businesses is deteriorating,” she said.
“As more economic damage shows up later this year, it would be justified for the authorities to intervene.”