Yuan Inches Up as PBOC Says China Is In “Very Good Situation”
The yuan inched up on Monday as governor of the People’s Bank of China Yi Gang said on the weekend that China is in a “very good situation” and that the yuan’s volatility is normal.
The USD/CNY pair slipped 0.06% to 6.9193 by 11:20PM ET (03:20 GMT). The Chinese currency has plunged more than 9% against the dollar in the past six months as worsening domestic economic outlook and tighter U.S. monetary policies were cited as headwind for the currency.
Despite recent fall in the yuan, PBOC governor Yi Gang said the currencies’ volatility is normal. “The currency has a flexible exchange rate mechanism, which now shows two-way fluctuation,” Yi said on Sunday in Bali during the IMF and World Bank’s meetings.
“For the full year, the yuan will stay in a reasonable range against the backdrop of an appreciating dollar," he added.
Yi then added that the fluctuation of yuan is much smaller than other currencies in developing economies and “basically similar” to those in developed countries.
“Economic growth, employment, inflation and the two-way fluctuation of the yuan are within reasonable range,” he said.
The People's Bank of China set the yuan reference rate at 6.9154 on Monday vs Friday's fix of 6.9120.
Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies rose 0.11% to 95.04.
The Japanese yen rose against the dollar as the USD/JPY pair traded 0.11% lower to 112.08, after U.S. Treasury Secretary Steven Mnuchin said during the weekend that Washington wants to incorporate a provision to prevent currency manipulation in future trade deals, including with Japan.
The yen traded higher in the last six out of seven trading sessions versus the dollar, as safe-haven demand increased during the global stocks sell-off last week.
The AUD/USD pair and the NZD/USD pair both traded 0.1% higher.