Rapid appreciation of China’s yuan not sustainable, says former PBOC official Rapid appreciation of China’s yuan not sustainable, says former PBOC official May 30, 2021 Article content
“We will prevent short-term money flooding from pushing up the yuan and diminishing the competitiveness of export firms,” said Sheng.
Chinese regulators had vowed to crack down on manipulation of the forex market and said the yuan exchange rate cannot be used as a tool to stimulate exports nor to offset the impact of surging commodity prices.
Prices of key commodities including steel products and copper had surged more than 30% since the start of the year, denting corporate profits throughout the supply chain. Surging raw materials costs have also raised worries about inflationary pressures and their potential impact on monetary policy.
“The appreciation of the yuan will squeeze margins at export firms, in particular the medium- and small-sized ones,” said Sheng, adding the rapid appreciation will also damage the broader economy as companies would be distracted from their main business and turn to speculation.
The PBOC-backed Financial News also warned on Sunday of the potential factors that would lead to a depreciation of the yuan against the dollar, including policy changes by the U.S. Federal Reserve, a strong revival of the U.S. economy, control of the COVID-19 pandemic and bursting of U.S. asset bubbles. (Reporting by Muyu Xu and Beijing Newsroom; Editing by Kim Coghill)

This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.