PBOC official says yuan faces "no big adjustment": China Securities Journal

[SHANGHAI] China's yuan faces no major adjustments due to the country's sustained current account surplus, a senior central bank official told the China Securities Journal, in a bid to sooth market concerns over further slides in the currency.

Zhu Jun, director of the international division of the People's Bank of China (PBOC), said in an interview with the official newspaper that China's international payment imbalances were not "serious".

"Generally speaking we feel there is no serious imbalance in China's international payments, and so do not agree with the view that the renminbi would have to undergo any major adjustment," he said.

The country's foreign exchange reserves unexpectedly fell below the closely watched US$3 trillion level last month for the first time in nearly six years. China's trade surplus with the United States, meanwhile, dipped to US$21.37 billion in January.

The yuan fell 6.6 per cent against the US dollar last year, its biggest slide since 1994, amid a surge in capital outflows from emerging markets, including China, on expectations of a faster pace of US interest rate increases over the next year.

Concerns of further sharp slide in the yuan prompted Beijing to effect a raft of measures to discourage money flowing out. In 2015, China stunned investors by devaluing the yuan, spreading turmoil in global financial markets.

Mr Zhu, however, said that there was no need to step up broad capital controls, echoing comments made by the head of the foreign exchange regulator earlier this week. "Implementing significant foreign exchange controls is not an effective method, we understand this very clearly," he said.

China's currency policy is closely watched globally, and has drawn rebuke from US President Donald Trump who says China, and others, have engaged in devaluing their currencies to the detriment of US companies and consumers.

China's yuan is up around 1.1 per cent so far this year against the US dollar.

REUTERS