Yuan move may head off more adjustments
China's move to weaken the yuan last week could head off further similar "adjustments", and the yuan is likely to move in both directions as the economy stabilises, Ma Jun, chief economist at the Chinese central bank said yesterday.
China shocked global markets by devaluing the yuan by nearly 2pc on August 11. The central bank called it a free-market reform but some saw it as the start of a long-term yuan depreciation to spur exports.
The yuan's drop last week and its increased flexibility could help "sharply reduce the possibility" of similar adjustments in future, Mr Ma said.
In the near term, it is more likely there will be "two way volatility" - appreciation and depreciation of the yuan - he added.
The central bank would move only in "exceptional circumstances" to iron out "excessive volatility" in the exchange rate, Mr Ma said.
He played down market fears that a "currency war" could be triggered by China's devaluation, which dragged some other Asian currencies to multi-year lows.
"China has no intention or need to participate in a 'currency war'," Mr Ma said, saying that "there is no need to worry" that the central bank will continue to intervene in the market to support the yuan as China's economy stabilises.
"In the future, even if the central bank needed to intervene in the market, it may be in either direction," he added.
Mr Ma said he expected the Chinese economy to grow around 7pc this year - in line with the government's target.