China will resolutely guard against overshooting risks in the yuan exchange rate, People’s Bank of China (PBOC) Governor Pan Gongsheng said, according to a report on Wednesday by Financial News, a newspaper owned by the PBOC.
The comments come as the Chinese yuan has lost more than 5% so far this year, making it one of Asia’s worst-performing currencies, amid widening interest rate differentials with other major economies and an uneven domestic economic recovery.
China will prevent the formation of one-sided and self-reinforcing market expectations in the Chinese yuan, Pan said at a financial forum in Beijing.
Despite losses against the dollar, Pan said the yuan’s value against a basket of currencies was largely stable, while the yuan appreciated slightly against other non-dollar currencies.
The trade-weighted CFETS yuan basket index stood at 98.49 on Wednesday, down 0.18% since the start of the year, according to a Reuters calculation based on official data.
Pan also reiterated that China is capable of maintaining the prudent operation of the foreign exchange market and the yuan will be basically stable, reasonable and balanced.
