PBOC: "Crackdown on Yuan Speculation... Will Take Action Without Hesitation If Necessary"

As the value of the yuan continues to decline, Chinese authorities warned on the 11th that they will crack down on yuan speculation.

Yuan. Photo by Yonhap News

According to Bloomberg News, the People's Bank of China stated in a press release that "We will firmly correct unilateral market movements, crack down on actions that disrupt market order, and take necessary measures without hesitation to prevent excessive appreciation of the exchange rate," adding "Financial regulatory authorities have the capability, confidence, and conditions to basically maintain the stability of the yuan exchange rate."

It further added, "Foreign exchange market participants should voluntarily maintain a stable market and firmly avoid actions that disrupt market order, such as speculative trading."

The yuan exchange rate recently continued its downward trend, reaching as high as 7.351 yuan per dollar on the 8th, marking the highest level in 16 years.

Bloomberg cited anonymous sources saying, "The People's Bank of China's announcement came as state-owned banks actively sold dollars," and "It is interpreted as a strong signal that the People's Bank will strengthen countermeasures if necessary and stabilize the yuan."

After the People's Bank's statement, the yuan exchange rate fell slightly to 7.293 yuan per dollar.

The People's Bank also expressed an optimistic outlook on the Chinese economy. It claimed, "Consumer prices in August rose compared to the same period last year, trade performed better than expected, real estate policies are increasingly effective, consumption has greatly recovered, and the country is witnessing groundbreaking progress in science and innovation."

It added, "Economic improvement is gaining momentum, which provides a solid foundation for the yuan to basically stabilize at a reasonably balanced level."

However, despite the People's Bank's efforts to support the yuan, many experts believe, according to Bloomberg, that the bank aims only to slow the pace of yuan depreciation and will not take extreme measures to reverse the yuan's downward trend.

This content was produced with the assistance of AI translation services.