China's central bank said on May 10 that it would further deepen the reform of the yuan's exchange rate formation mechanism and maintain the basic stability of the exchange rate at a reasonable and balanced level.
The country will deepen the market-oriented reform of the yuan's exchange rate mechanism, improve the managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies, and maintain the exchange rate flexibility, the People's Bank of China (PBOC) said in its first-quarter monetary policy report.
The PBOC vowed to strengthen domestic and foreign currency policy coordination, and seek a balance between maintaining yuan exchange rate flexibility, improving macro-prudential policy on cross-border capital flows and enhancing global macroeconomic policy coordination.
It will continue to reform the country's loan prime rate mechanism, which aims to better reflect market changes, improve the monetary policy transmission mechanism and guide lending rates lower.
While accelerating the development of the forex market, the PBOC vowed to help the country's import and export companies better manage exchange rate risks, and support the use of yuan in cross-border trade and investment.