Chinese regulators vow to crack down on yuan exchange manipulation
Reuters, 28 May 2021
Chinese regulators including the central bank will crack down on manipulation of the forex market, according to a statement published on the central bank’s website on Thursday.
The regulators said the current foreign exchange market is largely balanced and the yuan could move in either direction in the future. They reiterated no change to the country’s currency policy, which is a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies.
The currency policy is “suitable for China’s national conditions and should be adhered to in the long run,” the statement said.
The yuan exchange rate cannot be used as a tool to stimulate exports nor to offset the impact of surging commodity prices, and fluctuations are normal, it said.
The official remarks came after the onshore yuan advanced further to a new three-year high against the dollar on Thursday. Investors increased their bets on further strength in the Chinese unit after the Chinese central bank appeared not to show discomfort with recent gains.
Domestic markets have heatedly debated in recent weeks if China should allow further strength in its currency to offset rising commodity prices.
