China’s yuan volatility ‘affordable’, but Beijing urged to be ‘more powerful’ than Japan
- Swings in the yuan have not resulted in an economic shock or inflation, the market is still orderly and financial stability is intact, said former official Guan Tao
- Yuan bounced back from a near 15-year low against the US dollar and into the black in late afternoon trade on Tuesday amid a broader US dollar sell-off
Volatility in the yuan is still acceptable for China, but it should stand ready to face down currency speculators with a greater force than Japan if needed, according to a former official at the country’s foreign exchange regulator.
Swings in the currency have not resulted in an economic shock or inflation, the market is still orderly and financial stability is intact, said Guan Tao, former director of international payment department at the State Administration of Foreign Exchange (SAFE), in an interview with Bloomberg.
That has prevented the People’s Bank of China (PBOC) from engaging in large-scale currency intervention, unlike its Asian neighbour, and volatility is “affordable,” he added.
But “if some speculators go too far, the People’s Bank of China must be more powerful than the Bank of Japan (BOJ) to intervene in the foreign exchange market”, Guan said.