PBOC vows to maintain yuan’s stability, sending yuan surging against US dollar

 

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China’s financial regulators have the capability, confidence and conditions to maintain basic stability of the yuan’s exchange rate, the People’s Bank of China (PBOC) said on Monday.

The regulators will take resolute actions to curb pro-cyclical and one-sided market behaviors, crack down on behaviors that disrupt the market order and prevent overshoot risks of the yuan, it said.

pledging more efforts to correct pro-cyclical and one-sided behavior to curb speculation and overshoot risks.

A PBOC-led self-regulatory group that oversees China’s foreign exchange industry held a special meeting on Monday to discuss the foreign exchange market and the yuan’s exchange rates, according to a statement released by the central bank. 

Although the yuan depreciated against the US dollar recently, it remains basically steady against a basket of currencies and relatively strong against non-dollar currencies, it said, adding that the operation of the country’s foreign exchange market is stable and market expectations are steady.

Thanks to the implementation of a series of policies to stabilize the economy, China’s CPI witnessed a turnaround in August, the foreign trade figures beat expectations, property sector shows signs of improvement, domestic consumption posts notable rebound and sci-tech innovations continue to make breakthroughs, it said.

The positive momentum in the economy is accumulating, which lays a solid foundation for the yuan to stay at a reasonable and balance level, it said

The meeting pledged to make efforts to guide enterprises and financial institutions to adopt a risk-neutral philosophy and require foreign exchange market players to take the initiative to maintain market stability, carry out proprietary trading in an orderly fashion and curb market speculation.

The onshore yuan rallied by more than 750 pips or more than 1% to recover 7.27 per dollar mark and hit 7.2608 at one point, before paring gains to 0.8% and trade at 7.2834 per dollar. 

The offshore yuan extends gains to nearly 700 pips or 0.9% to recover 7.3 per dollar mark and hit 7.2932 per dollar at one point.