The exchange rate of China’s currency the Renminbi (RMB) will remain stable in 2017 along with reform and economic efforts, said People’s Bank of China (PBOC) governor Zhou Xiaochuan, on Friday.
Zhou made the remarks at a press conference on the sidelines of the fifth session of the 12th National People's Congress (NPC) when answering a question on what measures the central bank will take in 2017 to stabilize the RMB’s exchange rate, which went through relatively stronger fluctuations last year.
The governor first explained why the fluctuations in 2016 were stronger than usual.
He attributed the difference to two reasons. First is that in the second half of 2016, China’s foreign investments and overseas spending grew higher than in previous years due to Chinese enterprises’ growing interest in purchasing foreign companies. Secondly, the U.S. dollar grew stronger with a faster-than-expected pace after the election of U.S. President Donald Trump.
As for the RMB exchange rate in 2017, Zhou said it will remain stable due to healthier development of the Chinese economy and the progress made in reforms.
"We believe that this year, along with the steady and healthier development of the Chinese economy, and the progress of structural reforms on the supply-side, and the work on destocking, deleveraging, overcapacity cut and reducing costs and strengthening weak economic links, as well as the world’s stronger confidence in the Chinese economy, the RMB exchange rate will be automatically granted with a stable developing trend," said Zhou.
Meanwhile, the consistency in monetary policies and more elaborated implementation of these policies will also contribute to the stabilization of the RMB exchange rate in 2017, Zhou added.
However, the normal fluctuation in the RMB exchange rate cannot be ruled out, as no one can predict what uncertainties and affairs are going to happen, said Zhou.
"Of course the foreign exchange market has always been a sensitive market. It will show constant fluctuations with the impact of the affairs happening in the global economy and in China. So nobody can give a precise prediction over what uncertainties will come up in 2017, and what affairs will take place. Therefore, the normal fluctuation in the exchange rate should be regarded as a normalcy. It is a normal situation," he said.
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