Comments from People’s Bank of China Governor Yi Gang published on Saturday
- Judging both from economic fundamentals and from market supply and demand, the RMB exchange rate is at an appropriate level
- The generally stable market reactions and balanced cross-border capital flows so far indicate that there is growing market acceptance for two-way exchange rate fluctuations
The daily reference rate setting for the onshore yuan from the PBOC was barely changed for about a month leading into the trade discussions in Washington. Last week the setting began to shift around a little more. The question is whether China will allow a deprecation trend for the yuan to continue as trade talks progress. A weaker yuan is a bone of contention for the US.