China says yuan exchange rate to be relatively stable in 2017

Zhou Xiaochuan, governor of the People's Bank of China (PBC), Yi Gang, deputy governor of the PBC, Pan Gongsheng, deputy governor of the PBC and director of the State Administration of Foreign Exchange, and Fan Yifei, deputy governor of the PBC, greet the journalists at a press conference on financial reform and development for the fifth session of the 12th NPC in Beijing, capital of China, March 10, 2017. Photo: Xinhua

China said on Friday that the yuan exchange rate will become “relatively” stable this year as its economy will be steady and healthier in 2017.

“With the achievements of supply-side reform, cutting overcapacity, destocking, deleveraging, reducing cost, identifying growth areas, as well as with the international community being relatively confident on China’s economy, we believe that the yuan exchange rate will get relatively stable this year,” said Zhou Xiaochuan, governor of the People’s Bank of China, during a press conference in Beijing.

In the meantime, there would not be too many changes in policy level, but more efforts should be made in execution and supervision, Zhou added.

Zhou’s remarks came after China saw a big fluctuation in exchange rate in the second half of 2016 and as the country steps up its efforts to drive a more market-oriented exchange rate reform.

In analyzing the reasons for the fluctuation of the yuan exchange rate last year, Zhou said on one hand it was because China saw a huge increase in overseas investment in the second half of last year, and on the other, it was because of the uncertainties caused by the election of Donald Trump as the US President.

However, as the foreign currency market has always been a sensitive market, and is affected by both global economy and China’s domestic issues, “nobody can say exactly what will happen and what uncertainties there will be in 2017,” Zhou said. "As a result, there would always be some fluctuations in the exchange rate, and it is normal," he noted.

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