PBOC's Ma Says Yuan Hitting 7 to Dollar `Isn't That Crucial' - EcoFinBiz Blog

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PBOC's Ma Says Yuan Hitting 7 to Dollar `Isn't That Crucial'

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(Bloomberg) -- Whether or not China’s yuan hits the level of seven to the dollar “isn’t that crucial” as market players have accepted flexibility in the currency’s exchange rate, People’s Bank of China adviser Ma Jun said.

  • Media shouldn’t pay too much attention on whether a specific level could be the bottom line, Ma said. Yuan’s two-way volatility is similar to other major currencies
  • Room for monetary policy easing "isn’t big" due to relatively high leverage ratio
  • Ma spoke in an interview with Bloomberg News in Beijing Tuesday

Key Insights

  • The yuan weakened about 9 percent against dollar in the six months through October as trade tensions with the U.S. deepened.
  • The currency is still under depreciation pressure as China’s economy is likely to slow further as a government-led financial cleanup hurts investment sentiment
  • Policy makers face dilemma in adding stimulus measures to shore up growth and preventing the yuan from weakening too rapidly, which would risk capital outflows

Markets

  • Before Ma’s comments, the onshore yuan fell the most against a basket of trading partners’ currencies since Oct. 12 as China’s central bank weakened its daily reference rate

--With assistance from Yinan Zhao.

To contact Bloomberg News staff for this story: Heng Xie in Beijing at hxie34@bloomberg.net

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

©2018 Bloomberg L.P.

With assistance from Editorial Board

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