(Yicai Global) Feb. 16 -- China does not suffer from a serious international payment imbalance and will not undergo a substantial adjustment, a senior People's Bank of China official said. Rational expectations will guide the yuan's exchange rate to an equilibrium.
The yuan's exchange rate against the US dollar has seen a 13 percent pullback from a high of 6.05, and domestic and foreign attitudes towards yuan depreciation have weakened recently, said Zhu Jun, PBOC's international division director, in an interview with China Securities Journal.
The trend of yuan's exchange rate mainly depends on current accounts, said Zhu. Although capital accounts may affect the yuan's exchange rate in the short term, volatility is influenced heavily by expectations and to some degree by psychological factors, he said.
There is no serious imbalance in China's international payments, Zhu said. The country's trade in goods has a large surplus, services has some deficits and current accounts maintain a significant surplus, he said. The government knows that the sustained implementation of foreign exchange controls is not an effective way to manage capital outflow, he said.
China's recent measures, including increased scrutiny over the authenticity and transparency of the international payment balance, enhanced anti-money laundering regulations and the issuance of industrial guidelines, aim to put existing policies into place, rather than tighten foreign exchange controls.