China to Improve Yuan Convertibility, Chief of SAFE Says
Du Chuan
DATE:  Mar 26 2019
/ SOURCE:  yicai
China to Improve Yuan Convertibility, Chief of SAFE Says China to Improve Yuan Convertibility, Chief of SAFE Says

(Yicai Global) March 25 -- China will advance the convertibility of its currency, according to the chief of the nation's forex authority. 

China will open capital projects steadily, Pan Gongsheng, the head of the State Administration of Foreign Exchange, said in a statement today, speaking at a forum in Beijing. 

"China's capital projects have a high degree of convertibility," he said. "We will focus on opening a small number of non-convertible projects in the next step."

The market generally does not expect a sharp rise for the dollar as the China-US trade talks have seen important progress in many aspects, and these factors have provided support for the stability of the exchange rate, according to Pan.

The central parity of the Chinese yuan against the US dollar depreciated by almost 5 percent in 2018, which is less than the 10 percent decline in the emerging market currency index. The exchange rate has fluctuated in both directions while keeping an overall appreciation since entering this year, Pan said. 

The exchange rate's "automatic stabilizer" function is gradually gaining a stronger presence as the market keeps on growing and innovatING, while the central bank has basically withdrawn from daily interventions on the market.

China will maintain the flexibility of the exchange rate and raise the transparency and marketization of the central parity rate in order to keep the forex rate at a reasonable and balanced level, Pan said.

China has a stable macro leverage ratio, controllable financial risks, a healthy balance of payments, and enough forex reserves, so the economic fundamentals stay in good condition, Pan said. 

China does not aim to pursue a current account surplus or trade surplus, he said, adding that the current account is becoming increasingly balanced. 

Editor: Emmi Laine

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Keywords:   SAFE,Yuan