China will not devalue yuan to stimulate exports, says central bank deputy governor

China will not devalue yuan to stimulate exports, says central bank deputy governor
PHOTO: The Straits Times

BEIJING - China will not devalue its currency to stimulate exports, a deputy governor of the People's Bank of China (PBOC) said.

"China will definitely not devalue the yuan to stimulate exports, it will definitely not engage in a currency war. This is because China is a responsible major economy," Yi Gang told China's Economic Daily newspaper on Friday (March 10).

China's exports for January and February combined rose 4.0 per cent from the same period last year, while imports surged 26.4 per cent, suggesting solid improvement in demand domestically and abroad.

But the export outlook for China and other trade-reliant economists is being clouded by fears of growing US protectionism.

US President Donald Trump declared China the "grand champions" of currency manipulation in an exclusive interview with Reuters last month.

The US Treasury said in its last currency report in October that none of the US' major trading partners was manipulating its currency to gain advantage for its exports.

China will stick to its managed floating exchange rate framework to keep the yuan currency basically stable, Yi Gang said on Monday.

The yuan fell 6.5 per cent against the US dollar last year despite frequent interventions by authorities which have been chewing through the country's foreign exchange reserves.

The currency saw some respite early in 2017 as the dollar's rally faltered, but has come under renewed downward pressure in recent sessions on growing expectations the US Federal Reserve will raise interest rates next week.

If US rate rises do come to pass and buoy the dollar, most market watchers expect the yuan to fall by around 5 per cent this year.

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