What’s new: The People’s Bank of China (PBOC) aims to keep the yuan basically steady against the U.S. dollar, leaving the market to drive small fluctuations in the exchange rate, which will benefit the economy, central bank Governor Yi Gang said.
Yi’s statement came as the Chinese currency has experienced increasingly wide swings in recent years, weakening, and then strengthening, past the psychologically important level of 7 per dollar multiple times.
At a press conference held Friday by the State Council, Yi said that 7 is no longer a “psychological barrier.”
He noted that the PBOC will maintain a flexible, market-driven exchange rate mechanism that helps maintain economic stability.
The background: At one point last year, the onshore yuan’s daily reference rate weakened to 7.2555 per dollar, the lowest since 2008 during the global financial crisis.
The currency’s reference rate was set at 6.8951 on Monday.
Related: In Depth: What’s in Store for Yuan Internationalization in 2023?
Contact reporter Zhang Ziyu (ziyuzhang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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