PBoC Condemns WSJ Article Over Claim Central Bank Has Backtracked on Reform
Yicai Global
/SOURCE : Yicai
PBoC Condemns WSJ Article Over Claim Central Bank Has Backtracked on Reform

(Yicai Global) May 30 -- The People's Bank of China has torn into an article by the Wall Street Journal claiming that the central bank is backtracking on liberalization of the yuan exchange rate.

PBoC made its rare and pointed criticism of the Chinese-language report on May 27. It did not explicitly name the US newspaper.

"We condemn the irresponsible fabrication which is in violation of media ethics, and reserve the right to hold the offender accountable through legal action," the bank said in a statement.

PBoC said it has always adhered to market-oriented reform to increase the elasticity of movements in the yuan exchange rate, and maintain exchange rate stability at a reasonable and balanced level.

The Wall Street Journal's May 23 article, titled 'A Rare Look Inside China's Central Bank Shows Slackening Resolve to Revamp Yuan,' said: "On Jan. 4, the central bank behind closed doors ditched the market-based mechanism, according to people close to the PBOC. The central bank hasn't announced the reversal, but officials have essentially returned to the old way of adjusting the yuan's daily value higher or lower based on whatever suits Beijing best."

"The bank guides the daily direction of the currency by alternating between setting the yuan's value against the dollar and a basket of currencies," the report said, citing "people close to the PBOC."

"Behind closed doors in March, some of China's most prominent economists and bankers bluntly asked the People's Bank of China to stop fighting the financial markets and let the value of the nation's currency fall. They got nowhere. 'The primary task is to maintain stability,' said one central-bank official, according to previously undisclosed minutes of the meeting reviewed by The Wall Street Journal," the report said.

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