SHANGHAI (Reuters) – The central bank still has many policy tools to guide expectations for the yuan, which is unlikely to continue to depreciate sharply, a former People’s Bank of China (PBOC) official said.
The remarks by Sheng Songcheng, former director of the Statistical Analysis Department of the People’s Bank of China, come as the renminbi has depreciated by nearly 12 percent against the dollar so far this year. The U.S. dollar rose steadily against a variety of currencies on the back of hawkish monetary tightening by the Federal Reserve.
Sheng said the yuan is expected to trade between 7.0 and 7.3 against the dollar for the rest of the year.
COVID-19 shocks, energy disruptions and food supplies caused by the crisis in Ukraine and slowing global growth have created strong headwinds for the world’s second-largest economy .
China’s economy in the third quarter is likely to underline growing challenges at home and abroad, a Reuters poll showed. A rebound in growth would still leave it facing one of its worst years in nearly half a century.
The People’s Bank of China recently stated that stabilizing the yuan is a top priority and warned market participants not to repeat the same mistakes
The People’s Republic of China Banks can “revert to using counter-cyclical factors for midpoint pricing, or increase the size of offshore bill issuance and the market tightens RMB liquidity if necessary” to guide market expectations, Sheng added. , a person familiar with the process of setting the yuan’s exchange rate told Reuters in late September.