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PBOC Governor Yi Says Yuan Level ‘Appropriate’ After Weakening

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People’s Bank of China Governor Yi Gang said the yuan is at an “appropriate level” and cross-border capital flows have stayed balanced since the currency weakened past 7 per dollar in early August.

“Depreciation since the beginning of August has been driven and determined by market forces and reflects shifts in market dynamics,” and the currency has been moving in both directions, Yi said in a statement to the IMF’s steering committee during the fund’s annual meetings in Washington. The missive was posted Saturday on the IMF’s website.

He also said cross-border capital flows have been balanced, indicating growing acceptance by markets for exchange-rate fluctuations in China. In addition, after China reported the slowest economic growth since the early 1990s, Yi said the pace of expansion this year has been stable, “with main economic indicators kept within an appropriate range.”

The Chinese currency fell past the psychologically important level of 7 per dollar in August, prompting the U.S. to name the country a currency manipulator. That deepened the trade conflict between the countries, and the manipulator label has been a topic within the most recent negotiations aimed at ratcheting down the tariff war.

FX Commitments

U.S. Treasury Secretary Steven Mnuchin said earlier this month that there had been renewed commitments on transparency and that the U.S. was willing to review its August designation of China as a currency manipulator.

In the IMF statement, Yi reiterated Beijing’s pledges to make the yuan’s exchange rate more market-driven and the capital account more convertible, without giving details. He also said the country will lower the overall level of tariffs “voluntarily” though the statement didn’t tie that move to the U.S.-China trade dispute.

As for the IMF’s decision to delay the next round of changes to its voting structure until as late as 2023, Yi said China was “deeply disappointed,” while urging the organization to push ahead with a clear timetable and road map.

Such changes would give China a greater say in the crisis lender’s governance, though they’re subject to approval by the U.S., the largest shareholder. China became the third-biggest voter at the IMF in reforms ratified in 2015, up from sixth.

To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Scott Lanman, Sarah McGregor

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