(Yicai Global) May 8 -- China's central bank the People's Bank of China has stressed the need to continuously strengthen optimize the cross-border business policy regarding the Chinese yuan this year to promote its internationalization, at a meeting in Beijing.
PBOC held a work conference to set out work arrangements for the cross-border yuan policies this year, with Deputy Governor Pan Gongsheng in attendance.
The institution will give priority to local currency to expand the cross-border use of the yuan, and constant efforts shall be made to promote the convertibility of yuan capital accounts, Pan pointed out, adding that it will consolidate the market basis for market-oriented exchange rate reform and improve macro-prudential management framework.
A number of measures involving yuan's internationalization and the opening of Chinese financial market have been implemented recently, including the expansion of the (Renminbi) Qualified Domestic Institutional Investor, the increase in approved cross-border proprietary investments by securities firms, and extension of the one-day quota of the Shanghai-Shenzhen, -Hong Kong Stock Connect programs. All these represent an ongoing process of convertibility in China's capital accounts.
When the US dollar rebounded strongly last week, the yuan demonstrated a clear "anti-fall" nature. The one-week dollar index appreciated 1.2 percent, while the yuan in domestic and foreign markets only depreciated 0.25 percent and 0.55 percent against the dollar, respectively. The main reason is that the settlement direction is still relatively strong.
"Despite the rising trade frictions between China and the US, China neither intends nor needs to seek so-called 'export advantage' through yuan depreciation; therefore, two-way fluctuations in the yuan exchange rate within a reasonable range will not change," commented People's Daily previously.
Editor: William Clegg