Renminbi grows as PBOC pledges decisive action to prevent overshooting

Updated: Sep 11, 2023 By Zhou Lanxu Print
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The renminbi rebounded against the US dollar on Monday after Chinese financial authorities emphasized their readiness to act decisively to forestall any exchange rate overshooting.

The People's Bank of China, the country's central bank, said in a statement on Monday that financial authorities won't hesitate to correct one-sided, pro-cyclical behavior in the foreign exchange market and will deal firmly with any attempts to disrupt market order.

The onshore renminbi jumped upon the statement and hit 7.2699, strengthening by 711 basis points compared with Friday's close, according to market tracker Wind Info.

There is a "solid foundation" for the renminbi exchange rate to remain generally stable as the country's economic momentum is gathering steam, with the consumer price index bottoming out and resuming growth on a yearly basis, the PBOC statement said, following a meeting of the foreign exchange market self-discipline mechanism on Monday.

The country's consumer spending is recovering notably, foreign trade data has beaten expectations while real estate policies are gradually generating positive outcomes, the central bank said.

Adding to signs that China's economic prospects are improving with demand recovering, the country's increment in aggregate social financing — the total amount of financing to the real economy — came in at 3.12 trillion yuan ($428.2 billion) in August, up by 631.6 billion yuan year-on-year and compared with 528.2 billion yuan in July, according to the PBOC.

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