SHANGHAI: China’s central bank chief on Tuesday blamed the yuan’s recent weakness on the US dollar’s strength and external uncertainties, as state-owned banks were seen trying to prop up the currency.
“Recently, there have been some fluctuations in the foreign exchange market. We are paying close attention to this,” Yi Gang, governor of the People’s Bank of China (PBOC), said in remarks published on the PBOC’s website.
“This is mainly due to factors such as the strengthening of the US dollar and external uncertainties.”
Yi’s remarks come as the Chinese currency faces considerable pressure. The onshore yuan weakened past 6.7 per dollar in early trading on Tuesday for the first time since Aug. 9, 2017.
The yuan has lost more than 4% of its value against the dollar since mid-June, with state-owned banks seen on Tuesday trying to prop up the currency.
Yi’s statements did not make reference to market speculation about suspected intervention. The PBOC was not immediately available to respond to Reuters’ request for comment on the yuan’s moves.
China’s economic fundamentals remained sound and financial risks were largely under control, Yi said.
“International payments were stable, and cross-border capital flows were roughly balanced,” he added.
Yi said China must maintain its managed floating exchange rate regime, which is based on supply and demand and the yuan’s value against a basket of currencies, as experience had shown it to be effective.
Yi also added that China will continue to implement prudent and neutral monetary policy to keep the yuan basically stable at a reasonable level.