(Yicai Global) Oct. 23 -- The Chinese yuan’s exchange rate is expected to continue to fluctuate, but stay essentially stable at an appropriate and balanced level, influenced by both internal and external factors, Wang Chunying, spokesperson for the State Administration of Foreign Exchange, said at a press briefing today.

The yuan has risen 4.5 percent against the greenback thus far this year amid a 4.3 percent decline in the US Dollar Index, with the Euro gaining 5.9 percent and Japan’s Yen advancing 4.1 percent at the expense of the buck. The yuan has thus performed broadly in tandem with other major currencies in a relatively modest rise, Wang noted in reply to a question as to whether renminbi appreciation will accelerate after recent upticks in its value.

China's economic fundamentals have largely underpinned recent jumps in the redback rate, she added. China’s economy and society got back to work after the country was among the first to bring the pandemic to heel, prompting the International Monetary Fund to forecast that its economy will be the only major one to ring up growth this year, Wang said. Market supply and demand forces such as sound exports and increased holdings of yuan assets by long-term overseas funds have also driven the yuan up, she stated.

The SAFE will further work with the People's Bank of China to continue to push market-oriented reform of the exchange rate to steady it, Wang pledged.

The domestic options market's one-year implied volatility averaged 5 percent so far this year, implying a stronger flexibility in the conversion rate, she continued. Businesses should actively hedge against exchange rate risks, she advised.

Editor: Ben Armour