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China Rules Out Competitive Currency Devaluations

China Rules Out Competitive Currency DevaluationsChina Rules Out Competitive Currency Devaluations

China has no intention and no need to carry out competitive currency devaluations, the head of the country’s foreign exchange regulator said. In a weekend piece in the Chinese magazine Modern Bankers, Pan Gongsheng said the People’s Bank of China’s supplying of liquidity to the market was to prevent excessive fluctuations in the exchange rate and prevent a “herd effect”, to maintain market stability, Reuters reported. “China has no intention of raising competitiveness via currency devaluation. It does not have this wish, and it also does not have this need,” Pan, who runs China’s State Administration of Foreign Exchange, wrote. China was working hard to raise the exchange rate’s flexibility and to maintain its stability, he added. This was good for the international community and would avoid negative spillover effects from a disorderly exchange rate adjustment or competitive devaluations by other currencies, Pan wrote. Pan is also a vice governor of the PBOC. China’s yuan is up just around 0.6% so far this year, having lost nearly 7% in 2016.

 

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