PBoC: Big currency moves hurt global economy

Large moves in currencies hurt the global economy while a country’s current account balance can be used as a "window" to see if its exchange rate is at an equilibrium level, Bloomberg reported, citing the central bank’s deputy governor Hu Xiaolian. Hu said the level of an exchange rate is based on market demand and supply and it is good to have currencies with a certain amount of flexibility but "big" fluctuations in major currencies are not favorable. Hu’s comments follow the announcement by the People’s Bank of China that it would loosen the renminbi’s 23-month peg to the US dollar and allow for more flexibility. The renminbi has since risen 0.8% but criticism remains strong from several of China’s trading partners such as the US who seek more pronounced moves to allow the Chinese currency to strengthen further.