Said the rapid rise of the RMB against the US dollar may have overshot, signalling excess short-term speculation.
Speaking with Xinhua (info via Reuters)
Comments are from Sheng Songcheng, former director of the surveys and statistics department at the PBOC. Bolding is mine:
- "We will prevent short-term money flooding from pushing up the yuan and diminishing the competitiveness of export firms"
- "The appreciation of the yuan will squeeze margins at export firms, in particular the medium- and small-sized ones"
- Sheng also said rapid rise in the rate will distract firms from their main business as they turn to speculative activities!
Sheng's warnings come with the background:
- On Friday the PBOC set the reference rate (midpoint) for onshore yuan at its strongest (for the yuan) since May of 2018
- larger state-owned banks were reported as selling yuan against the USD last week, which would have the impact of slowing the yuan's rise
Separately over the weekend, the PBOC-sponsored Financial News outlet warned on factors that could lead to a fall of the yuan against the USD, including:
- policy changes by the Fed
- strong revival of the US economy
- control of the COVID-19 pandemic
- a bursting of U. asset bubbles
