Business / Policy Watch

Yuan level appropriate: central bank

(Agencies) Updated: 2015-03-22 10:37

Yuan level appropriate: central bank

A $100 banknote is placed next to 100 yuan banknotes in this October 16, 2010 file picture illustration taken in Beijing. [Photo/Agencies]

The current level of China's yuan is appropriate because it reflects foreign exchange supply and demand and economic fundamentals, a top central bank researcher said on Saturday.

On Friday, the yuan ended its best week since 2007 after a rush of dollar sales over the past few days by major State-owned banks.

Lu Lei, head of the research bureau at the People's Bank of China, reiterated the policy goal of keeping the yuan "basically stable on a reasonable and balanced level".

"We believe the current level is appropriate, it reflects the situation of the real economy, reflects the surplus and shortfall in global capital, also reflects money supply of our country and other countries," he told reporters on the sidelines of a forum.

The yuan's jump of close to 1 percent during the week followed months of weakness.

Lu also said the government would conduct more experiments in making the yuan convertible on the capital account, but would take steps to manage risks from cross-border capital flows.

Yi Gang, a deputy central bank governor who is also the country's top foreign exchange regulator, said China would soon allow Chinese individuals to invest in overseas markets using the local currency through a pilot program.

"We are studying plans to allow individuals to invest overseas," he told the forum. Yi said such an investment scheme would be launched "in the near future".

Shanghai, China's financial hub, hopes to allow individuals to invest in overseas markets this year through a trial scheme to be launched in its free trade zone, a city government website has reported.

The new Qualified Domestic Individual Investor program, or QDII2, is part of measures jointly proposed by the municipal government, the central bank and government regulators that would promote capital account yuan convertibility and international use of the yuan.

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