China’s yuan jumps after central bank vows to curb speculation

CHINA’S yuan jumped on Friday (May 19) after the country’s central bank moved to shore up the currency after a recent selloff, vowing to curb speculation and calling for more stability in the foreign exchange market.

The People’s Bank of China and the foreign exchange regulator will “strengthen market expectation guidance and take actions to correct pro-cyclical and one-way market behaviours when necessary,” according to a statement on Friday. 

In offshore trade, the yuan gained 0.5 per cent to 7.0121 per dollar and pulled away from 7.0750, its weakest level since December. 

“The announcement definitely came as a surprise given that their daily fixing hasn’t really provided much pushback on this week’s yuan depreciation,” said Simon Harvey, head of FX analysis at Monex Europe in London. “They aren’t happy with the pace of depreciation in the currency, given marginal developments in the fundamentals.” 

The PBOC’s move comes as a weaker-than-expected run of Chinese economic data pressured the yuan, while the US dollar has gained broadly. The announcement followed a Thursday meeting of the China FX Committee, which is a market-guiding body made up of officials from the PBOC, State Administration of Foreign Exchange and industry veterans. PBOC Deputy Governor Liu Guoqiang was in attendance.

Officials called for market stability and for drastic moves in the exchange rate to be reduced, according to the statement. BLOOMBERG