The Chinese yuan weakened after the closely watched 7.2 level against the greenback this week.
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BEIJING – People’s Bank of China warned against betting on yuanafter a rapid decline against the US dollar this week.
“Don’t bet on a one-way appreciation or not accept the renminbi’s exchange rate,” the central bank said in a statement. Declaration of China on its website late Wednesday, according to a translation by CNBC.
That was based on a speech given by Vice Governor Liu Guoqiang at a video conference on foreign exchange that day.
Renminbi, or yuan, surpassing 7.2 against the greenback Wednesday, fell to its weakest since 2008. US Dollar Indextracks the dollar against major global currencies, has surged to a two-decade high as the US Federal Reserve aggressively raised interest rates this year.
Goldman Sachs analyst Maggie Wei and a research team said the PBOC’s statement, which asks banks to maintain stability in the foreign exchange market, is “a verbal guide against rapid devaluations,” said Goldman Sachs analyst Maggie Wei and a research team. recent rapidity of this coin”.
However, the yuan’s break above 7.2 “suggests that Chinese policymakers are not necessarily defending a particular level of the exchange rate,” the report said. “The statement from the PBOC may slow down the rate of decline of the CNY above the band.”
The domestically traded yuan weakened against the dollar 1.9% this week, according to Wind Information.
China’s central bank has made other moves to support the yuan this month, including reduce the amount of foreign currency the bank needs to hold.
