China’s forex regulator has promised to use “counter-cyclical” methods to maintain the stability of the nation’s currency, including countering cross-border capital outflow volatility in the worst-case scenario.
A spokeswoman for the State Administration of Foreign Exchange said on Thursday that the government was well-prepared to stabilise the yuan in the event of a significant downfall in its value. Wang said the regulator would strengthen “macro-prudential management” and “micro-level market supervision” to bolster markets, though did not give further policy details.
As Reuters reports, analysts have interpreted Wang’s statement as a signal of the central bank’s no-tolerance position towards potential speculation against the yuan, which has fallen some 7% against the dollar since the end of the first-quarter. The use of a ‘counter-cyclical’ x-factor in determining the reference rate for the onshore yuan was previously used in 2017 but abandoned early this year as the currency stabilised.
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