China’s yuan: central bank to boost flexibility of exchange rate to handle ‘shocks’ from overseas monetary policy
- The People’s Bank of China has vowed to ‘appropriately handle shocks’ from monetary adjustments in advanced economies
- China’s central bank says it will increase the flexibility of the yuan exchange rate and prioritise stability and domestic needs
China’s central bank pledged on Friday to increase flexibility of the yuan exchange rate and monitor possible shocks caused by overseas monetary tightening and a deteriorating global economy.
The rally of the yuan over the past several weeks has buoyed confidence in the country’s economic prospects after a chaotic end to 2022.
Beijing has also dealt with spillover shocks from aggressive US rate hikes last year by emphasising on domestic economic priorities.
Xuan Changneng, deputy head of the People’s Bank of China (PBOC), said the central bank would “appropriately handle shocks” emanating from monetary adjustments in advanced economies.
We’ll increase the flexibility of the yuan exchange rate so it plays its role as a stabiliser in macro economy
Xuan, who was promoted in October after four years as deputy head of the State Administration of Foreign Exchange, said the recent yuan rally was a result of China “optimising” pandemic controls and subsequent domestic recovery, as well as market expectations of a slowdown in US rate increases.