Pan Gongsheng, a deputy governor of the People’s Bank of China said in a press conference on Friday that Chinese authorities have accumulated rich experience and developed policy tools to cope with currency market volatility.
“For those who are trying to short the renminbi. We are very familiar with each other as we fought hand to hand a few years ago. I think it’s still fresh in our memory,” Pan said.
Pan’s comments sparked a sharp recovery of the yuan.
Despite the turnaround, market participants increasingly expect the yuan will face downward pressure in coming months and could breach 7 per dollar, a level last seen during global financial crisis.
China’s yuan ended domestic trading firmer on Friday after a senior central banker issued a warning against speculators, sparking a recovery from a 22-month low hit earlier in the session.
The onshore spot yuan ended the day at 6.9478 per dollar, 14 pips or 0.02 percent firmer than the previous late night session close, and off the low at 6.9647, the yuan’s weakest level since Dec.28, 2016.
Prior to market opening, the People’s Bank of China set the yuan’s fixing at 6.951 per dollar, 101 pips or 0.15 percent weaker than the previous fix of 6.9409.