China central bank official says yuan at right level

China’s yuan is at an all-time high right now and bilateral currency fluctuations will not cause erratic capital flows, a senior official at the People’s Bank of China told Tuesday.

U.S. President Donald Trump threatened earlier this month to impose more tariffs on Chinese goods from September 1, though there are signs that China is trying to curb declines.

“The current level of the RMB exchange rate is in line with the fundamentals of China’s economy and market supply and demand,” said Zhu Jun.

She said China was “shocked” by the US Treasury Department’s move last week to label China a currency manipulator, hours after Beijing allowed the yuan to fall through a key support level to its lowest point in more than a decade.

But Zhu asserted that China would be able to “navigate all scenarios” arising from Washington’s manipulative currency label.

As long as the RMB moves on a regular basis based on market supply and demand, such movements in both directions do not necessarily mean erratic capital flow movements, “Zhu Juan said.

The yuan will be backed by China’s solid economic fundamentals, a stable debt ratio, financial risks involved, adequate foreign exchange reserves, and favorable interest rate spreads between China and the major advanced economies, she said.

“Over the medium and long term, we have full confidence in the RMB as a strong currency,” Zhu said.forex.com

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