China’s yuan to eventually stabilise around 6.6 vs dollar-c.bank adviser

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-ibtimes.com


SHANGHAI:  The Chinese yuan will likely stabilize to around 6.6 against the dollar in the longer-term, in line with Beijing’s aim to maintain a steady and neutral monetary policy, the Shanghai Securities News reported on Monday, citing a central bank adviser.

Sheng Songcheng said at a forum over the weekend that factors such as a depreciation of the dollar and rising interest rates in financial markets were causing the yuan to strengthen against the greenback, but that he expected these to eventually recede.

“There is currently no pressure to depreciate the yuan and it is not necessary to increase deposit and lending rates in the real economy,” he was quoted by the newspaper as saying.

However, he added that there was a need to maintain the stability of the yuan and that he expected it to return to around 6.6 against the dollar after which it would not see large fluctuations.

He also said that the greenback’s poor performance in recent days could be attributed to poorer-than-expected U.S. payrolls data for December, and added that he only saw limited returns of up to $15 billion from a sweeping tax overhaul plan launched by U.S. President Donald Trump.

The yuan has so far scored a four-week winning streak against the greenback as confidence in the currency has built up on signs of resilience in China’s economy. Tighter liquidity conditions in China’s financial system have also kept interest rates elevated.

The People’s Bank of China on Monday set the yuan mid-point at 6.4832 against the dollar, which compares with the previous close of 6.4887.

China’s benchmark 10-year government bond yield on Friday hovered near 4 percent, the highest in three years, compared with 2.45 percent for 10-year U.S. Treasuries . –REUTERS

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