China cenbank blames yuan moves on dollar rise, external uncertainty

  • China cenbank blames yuan moves on dollar rise, external uncertainty

China cenbank blames yuan moves on dollar rise, external uncertainty

China's yuan rebounded for a second day on Wednesday as the currency took a breather from its sharp depreciation in recent weeks, although bearish sentiment lingered as the U.S. prepares to implement tariffs on US$34 billion of Chinese imports on July 6. Beijing has said it would retaliate with tariffs on USA products.

"International payments were stable, and cross-border capital flows were roughly balanced", Yi said in a statement published on the PBOC's website.

"Stock market plunge is irrational overreaction", read a headline on the front page of state-run newspaper Securities Daily on Tuesday.

Macquarie's Larry Hu and Irene Wu wrote in a recent research note that the People's Bank of China might have chosen not to intervene as part of a deleveraging campaign.

In early trade on Tuesday, yuan weakened to a low of 6.7204 against the dollar, the lowest since August 7, 2017. At 0542 GMT it was trading at 6.7010.

The currency hit to an eleventh month low today after it fell almost 1% against the USA dollar in early trading, and recovered to gain 0.3%.

Also muddying trade relations between the world's two largest economies was a Chinese court ruling that temporarily barred USA chipmaker Micron Technology Inc from selling some of its main products in the world's biggest memory chip market. He said that the bank is closely watching the foreign exchange market's recent fluctuations due to a strengthening dollar and external uncertainties. The PBOC was not immediately available to respond to Reuters' request for comment on the yuan's moves.

The central bank earlier set the midpoint at 6.6497 yuan per dollar, its weakest fixing in about 10 months.

To deepen market-oriented exchange rate reform.

"Investors don't care and spot yuan rates continued weakening", a trader said.

It also studied key tasks, including pushing financial reform and opening-up, maintaining a prudent and neutral monetary policy, keeping financial market liquidity "reasonably ample", and effectively managing the pace and intensity of financial regulation.

The benchmark Shanghai Composite Index gained 0.41% to 2 786.89 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.76% to 1 594.24.

Hong Kong's Hang Seng Index was hammered after a one-day hiatus on Monday to mark the day that the former British colony was returned to China. It sharply depreciated by 3.3 percent in June, the largest monthly drop ever.

He acknowledged that in a trip to Shanghai last week, he "detected increasing alarm over trade tensions and a lot of nervousness about a full blown trade war, which comes at a bad time for China, where the economy is undergoing a downdraft at precisely the same time the United States is seeing a sharp upturn".

"We have long anticipated and prepared for this.The impact on the Chinese economy is within a controllable range".