Central Bank: The foreign exchange market is expected to be basically stable, and there are neither "aunts" nor "predators"

In response to a question about the "trend of the RMB exchange rate", Liu Guoqiang, vice governor of People's Bank of China, said at a press conference held by the State Council's new office on the 7th that recently, the RMB exchange rate has fluctuated, and everyone is indeed very concerned about the change in the exchange rate and the future trend. Although the current RMB exchange rate has depreciated, it has not deviated from the fundamentals, the People's Bank of China has also taken comprehensive measures to manage expectations, the foreign exchange market is running smoothly, the settlement and sale of foreign exchange by financial institutions, enterprises and residents is rational and orderly, and market expectations are basically stable. In a common saying, there are neither "aunts" nor "predators" in the current foreign exchange market.

"We have stressed many times in the past that the exchange rate is neutral and cannot be manipulated arbitrarily, otherwise it will not only not get any benefits, but also harm others and harm themselves." Liu Guoqiang pointed out that the trend of the RMB exchange rate depends on the fundamentals of the economy in the long run, and it is inaccurate in the short term. Taken together in the long and short term, China is a large open economy, and the exchange rate is affected by various factors, which may rise or depreciate. But up and down, it won't go anywhere. In the past few years, the exchange rate of the renminbi against the US dollar has broken "7" three times, and then returned to "7" three times. Recently, the renminbi once again "broke 7" against the US dollar, which is the fourth time since 2019. But as you can see, it has begun to pick up significantly in the past few days. China is both a big exporter and an importer, "sugarcane is not sweet at both ends", and the exchange rate is too high or too low is not good. China implements a managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies, and this mechanism is good and must continue to be adhered to.

"In other words, the exchange rate is generally determined by the market, and at the same time, we must better play the role of the market and the government, and resolutely avoid the fluctuation of the exchange rate." Liu Guoqiang said.

Liu Guoqiang said that from the current point of view, although the RMB exchange rate has depreciated, it has not deviated from the fundamentals, the People's Bank of China has also taken comprehensive measures to manage expectations, the foreign exchange market is running smoothly, financial institutions, enterprises and residents have rational and orderly foreign exchange settlement and sale behavior, and market expectations are basically stable. In a common saying, there are neither "aunts" nor "predators" in the current foreign exchange market. From the perspective of the macroeconomic market, the long-term good fundamentals of China's economy have not changed. With the smooth economic cycle and new breakthroughs in high-quality development, China's economic operation will continue to improve as a whole. From the perspective of the balance of payments, China's current account surplus remains at a moderate level of about 2%, and cross-border capital flows are basically balanced. Recently, the net inflow of foreign funds into domestic bonds continued to be maintained. From the perspective of the reserve market, China's foreign exchange reserves are sufficient, and the balance still ranks first in the world. And this balance is relatively high, more than $3 trillion. In general, with the support of these "three markets", under the market-oriented exchange rate formation mechanism, the RMB exchange rate will not appear a "unilateral market", and will still maintain two-way fluctuations and dynamic equilibrium.

"Maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level is both a policy goal and a welcome one." Liu Guoqiang said that in recent years, in the process of coping with multiple rounds of external shocks, the People's Bank of China has accumulated rich experience in coping with it and has sufficient reserves of policy tools. Neither without concentration, nor too Buddhist. We have the confidence, conditions and ability to cope with various shocks and maintain the smooth operation of the foreign exchange market. As for the specific policy tools, we will use them reasonably according to the needs of the situation, policy tools are used, used when needed, not needed, and which one needs to be used, which one needs to be used, which is to choose.

Liu Guoqiang pointed out that in the next step, the People's Bank of China will follow the decisions and arrangements of the Party Central Committee and the State Council, with the goal of maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level, taking expectation management as the core, comprehensively implementing policies and stabilizing expectations, correcting market pro-cyclical and unilateral behavior when necessary, and resolutely preventing the exchange rate from fluctuating sharply.