China’ central bank does not have any “bottom line” for either the yuan exchange rate against the dollar or foreign exchange reserves, Reuters cited a senior official as saying on Monday.
“As far as I’m concerned, we’ve set no bottom lines for the yuan exchange rate and foreign exchange reserves. The market would have a conjecture when yuan has reached a certain level, and then the conjecture becomes expectation, while actually, we’re not concerned which specific level they may reach, “Zhou Xuedong, director of the business management department in the People’s Bank of China, told Reuters.
Zhou explained if yuan’s value rises too quickly and too sharply, it might be overestimated and so there must be some fine tuning for it to fall back; while if yuan depreciation expectations are not managed and instructed, it would affect macro economy and players in micro economy in negative ways.
“We do not deliberately pursue the appreciation or depreciation of the yuan, because that is not sustainable,” he said.
According to Zhou, Chinese companies have sped up their pace to ‘go global’ and China’s outbound direct investment volume has exceeded the foreign direct investment it attracted. China has become a net exporter of capital. Some outbound investment projects may go against China’s industrial policies that encourage strategic investment that would help with the country’s restructuring to a more efficient economy. “Foreign exchange reserves are very valuable reseource. Even though there is a big stock in China, (we need to) value it,” said Zhou.