Under-fire yuan at right level, says China central bank official

China’s yuan has weakened by almost 2.4 percent since the latest US threat to extend tariffs on Chinese goods. (AFP)
Updated 13 August 2019

Under-fire yuan at right level, says China central bank official

  • The yuan has weakened by almost 2.4 percent since US President Donald Trump threatened earlier this month to impose more tariffs on Chinese goods from Sept. 1

BEIJING: China’s yuan is at an appropriate level currently and two-way fluctuations in the currency will not necessarily cause disorderly capital flows, a senior official at the People’s Bank of China said.
The yuan has weakened by almost 2.4 percent since US President Donald Trump threatened earlier this month to impose more tariffs on Chinese goods from Sept. 1, though there are signs China is trying to stem the declines.
“The current level of RMB exchange rate is appropriately aligned with fundamentals of China’s economy and market supply and demand,” Zhu Jun, head of the central bank’s international department, said in an interview with Reuters.
She said China was “shocked” by the US Treasury Department’s move last week to label China a currency manipulator, hours after Beijing let the yuan drop through a key support level to its lowest point in more than a decade.

HIGHLIGHTS

• External shocks may drive yuan moves.

• Moves unlikely to spur disorderly fund flows.

• China able to cope with consequences.

But Zhu asserted that China will be able to “navigate all scenarios” arising from Washington’s currency-manipulator label.
In the short run, external shocks will also play a role by influencing the yuan’s movements, she said. “That said, as long as RMB moves in an orderly manner based on market supply and demand, such movements in either direction do not necessarily mean disorderly movement of capital flow,” Zhu said. The yuan is also known as renminbi, or RMB.
The yuan will be supported by China’s solid economic fundamentals, a stable debt ratio, contained financial risks, adequate foreign exchange reserves, and favorable interest rate spreads between China and major advanced economies, she said. “Over the medium and long term, we have full confidence in RMB as a strong currency,” Zhu said.


US President Trump does not want to do business with China’s Huawei

Updated 19 August 2019

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”