China is not going to devalue its currency to stimulate exports, a deputy governor of the People’s Bank of China (PBOC) said.
“China will undoubtedly not devalue the yuan to stimulate exports, it’ll undoubtedly not take part in a money war. This is because China is a responsible leading market,” Yi Gang told China’s Economic Daily newspaper on Friday.
China’s exports for January and February combined increased 4 per cent from the exact same period this past year, while imports soared 26.4 per cent, indicating strong progress in demand domestically and abroad.
However, the export outlook for China and other commerce-reliant economists is being clouded by fears of growing US protectionism.
US President Donald Trump declared China the “grand winners” of money manipulation in an exclusive interview with Reuters last month.
The US Treasury said in its last money report in October that not one of the US’ leading trading partners was manipulating its currency to gain edge for its exports.
China will stick to its managed floating exchange rate framework to maintain the yuan money essentially steady, Yi Gang said on Monday.
The yuan fell 6.5 per cent against the US dollar last year despite regular interventions by authorities which have been chewing through the nation’s foreign exchange reserves.
Next week, the money found in 2017 as the US dollar’s rally faltered, but has come under renewed downward pressure in recent sessions on growing expectations the US Federal Reserve will increase interest rates.
If buoy and US rate increases do come to pass the US dollar, most market watchers expect the yuan to drop by around 5 per cent.