Zhou comments drag down yuan
Print Edition
THE yuan yesterday weakened the most in two weeks after central bank Governor Zhou Xiaochuan said China’s economy is in an “unusually intricate” situation.
China is trying to manage multiple tasks simultaneously amid increasing downward pressure, including stable economic growth, structural adjustment, reforms, risk control and people’s well-being, Zhou told a seminar in east China’s Zhejiang Province, according to a note issued by the People’s Bank of China yesterday.
These tasks represent an “unusually intricate” situation for the economy, and pose a challenge to the authorities in implementing a prudent monetary policy, Zhou said.
The yuan weakened 0.15 percent against the US dollar to 6.2486 in Shanghai, the largest daily decline since May 12. Yesterday’s close was the currency’s weakest level since April 30, when it closed at 6.2593 to the dollar, according to the China Foreign Exchange Trade System prices.
The close was 1.3 percent off the PBOC’s central parity rate of 6.1687 per dollar, 0.02 percent stronger than Monday.
Economists said the yuan may continue to weaken under a cooling economy aggravated by a property market downturn, but not by much.
“With China a large net creditor to the world, holding nearly US$4 trillion in foreign exchange reserves and improving current account balance, it would be difficult for the government to weaken the currency against pressure from key trading partners,” Wang Tao, UBS chief economist, wrote in a note yesterday.
The offshore yuan traded in Hong Kong slipped 0.17 percent to 6.2477 per dollar yesterday, according to Bloomberg News.
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