(Yicai Global) July 1 -- China's central bank has censured media outlets that publish "unreal" reports on foreign exchange rates that lead to shorting of the yuan and disorder on the foreign exchange markets, and said it reserved the right to take legal action.
Reuters news agency said yesterday that the People's Bank of China was willing to devalue the yuan this year to 6.80 against the dollar to boost economic growth. The offshore rate dropped below 6.70 on the news to hit its lowest level since January. The onshore yuan market was also affected.
"The plunge in onshore yuan exchange rates is directly attributable to the report published by Reuters," said a senior foreign exchange trader at a joint stock bank. "The central bank can't possibly say that the exchange rate will drop below 6.80."
China's monetary authority also said there has been notable fluctuation in the global forex market after the UK's decision to secede from the European Union, with the yuan weakening against the dollar. From a long-term perspective, however, the yuan has remained stable in relation to the basket of major world currencies, and so have market expectations, it said.
The Chinese economy is expected to maintain a medium to high growth rate, and the government does not plan a competitive currency devaluation, the bank said. Given the economic fundamentals, there is no basis for a long-term devaluation of the yuan.