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China's move to more market-determined yuan should be welcomed: RBA
[SYDNEY] Chinese authorities have moved their exchange rate regime towards a more market-determined rate, a development which should be welcomed, a senior Australian central banker said on Wednesday.
Reserve Bank of Australia Assistant Governor Guy Debelle noted that while the initial effect of the Aug 11 move was for the yuan to depreciate by around 4.5 per cent, it should be viewed against the fact that the currency had appreciated by more than 15 per cent over the past year in trade-weighted terms. "This is not all that big in the general scheme of exchange rate moves, though it generated a very large amount of commentary," Mr Debelle told an Actuaries Institute Banking Seminar in Sydney. "On that day, the Chinese authorities moved the exchange rate regime further along the path to a more market-determined rate, a development which should be welcomed." Debelle also spoke about the rundown in China's foreign exchange reserves, a decline in global bond market liquidity and low global long-term yields. "All three of these issues are going to be with us for a while to come. So it is important we adjust to the current environment rather than wish it was something else," he said.