© Reuters. FILE PHOTO: Coins and a banknote of China’s yuan are seen on this illustration image taken February 24, 2022. REUTERS/Florence Lo/Illustration/File Photo
SHANGHAI/SINGAPORE (Reuters) – The depreciation pressure on the against the U.S. dollar is temporary, state media stated on Tuesday, noting that its worth against main buying and selling accomplice currencies is steady.
The remarks made by the official Economic Daily observe a number of different related feedback by authorities in current months, each by way of state media and at press conferences, and are available a time the yuan has been going through persistent weak spot against the U.S. foreign money.
It is down greater than 5% on the dollar year-to-date and is the one of many worst performing Asian currencies in 2023. But against a basket of key currencies the yuan has solely misplaced 0.15% in the identical interval to 98.52 on Tuesday, in response to Reuters calculation based mostly on official knowledge.
Widening yield differentials with different main economies, notably the United States, have piled downward pressure on the Chinese foreign money against the dollar.
“The yuan exchange rate still depends on economic fundamentals in the long run,” the newspaper stated within the commentary.
“Financial regulators will take action when needed, resolutely correct unilateral and pro-cyclical behaviors, deal with activities that disrupts market orders, and prevent the exchange rate overshooting risks.”
The People’s Bank of China (PBOC) lower the quantity of overseas trade that monetary establishments should put aside as reserves final week, a transfer that the Economic Daily described as having a “positive impact” on stabilising expectations on the foreign money and restoring market confidence.
“Based on previous FX reserve requirement ratio (RRR) reductions, the cut could ease depreciation pressure, prevent overshoot risks and boost confidence in the short term,” it stated.
