(Yicai Global) Sept. 29 -- It is normal for the Chinese yuan’s exchange rate against the US dollar to fluctuate. Therefore, do not bet on the redback’s unidirectional movement as not a single gambler will win, the People’s Bank of China said yesterday as the yuan plunged to fresh lows against a buoyant greenback.

The PBOC has rich experience in handling a variety of situations and can manage market expectations, the central bank said, citing a speech by one of its officials at the National Foreign Exchange Market Self-Discipline Mechanism Video Conference on Sept. 27.

Both the onshore and offshore yuan weakened past the 7.2 mark yesterday for the first time since Feb. 2008. As of 4.30 p.m. Beijing time, the offshore yuan had sunk 800 price interest points from the previous trading day to stand at 7.2576 to the US dollar, while the onshore yuan slid 878 pips to close at 7.2458.

Although the forex market is running in a standardized and orderly manner, some companies are blindly speculating on the yuan exchange rate and some banks are breaking the rules, the PBOC said. There needs to be heightened guidance and efforts to correct these behaviors.

The foundation to keep the yuan exchange rate stable is solid, the central bank said. Compared to many countries facing deflation risks, China’s economy continues to recover and grow. Prices are pretty much stable and the trade surplus is set to stay at a high level. And the economy will only get stronger as macro policies begin to take effect, it added.

The yuan exchange rate has remained at a reasonable and balanced level so far this year, the PBOC said. The China Foreign Exchange Trade System's Yuan Index has stayed almost unchanged since the end of last year. And the redback is one of only a few strong currencies in the world. Its deprecation against the US dollar is only half the dollar's appreciation over the period, and there has been a material gain in the yuan's exchange rates against the Euro, the UK Pound Sterling and the Japanese Yen.

The PBOC has intervened twice so far this month to stem the slide of the yuan. Earlier this week it said it is increasing the forex reserve requirement ratio for forward forex sales to 20 percent from zero starting Sept. 28. And on Sept. 5, it said it is cutting banks' forex RRR to 6 percent from 8 percent, effective Sept. 15.

The Chinese forex market self-discipline mechanism, set up in June 2016, is a market coordination mechanism in which big players on the forex and related markets participate, it said. The 500-plus members include banks, brokerages and finance companies backed by central government enterprises.

Editor: Kim Taylor