China central bank head says opposes competitive currency depreciation

Zhou Xiaochuan, Governor of the People's Bank of China, answers a question at a news conference on the sidelines of the National People's Congress (NPC), China's parliament, in Beijing, China, March 12, 2016. REUTERS/Jason Lee

BOAO, China (Reuters) - China opposes competitive currency depreciation and there should be increased global coordination on foreign exchange policies, central bank governor Zhou Xiaochuan said on Thursday.

Premier Li Keqiang and other Chinese officials have repeatedly said the country will not rely on yuan depreciation CNY=CFXS to spur exports.

“China doesn’t believe in using competitive depreciation of its currency to stimulate exports,” Zhou told an annual forum in Boao, on the southern Chinese island of Hainan.

“As Premier Li has said, we need to increase communication and coordination regarding exchange rate policies,” he said.

Zhou said emerging economies should also increase communication and coordination on issues concerning capital outflows.

On Sunday, Zhou said capital outflows from China had shown a significant easing, citing an abating of concerns about a slowdown in the world’s second-largest economy.

Recent data showed net foreign exchange sales by the central bank and commercial banks dropped in February as the yuan CNY=CFXS stabilized, partly due to the dollar's broad retreat as expectations cool of further interest rate rises by the U.S. Federal Reserve.

Zhou said the Group of 20 nations may discuss how to enhance the role of the IMF’s Special Drawing Rights (SDR) basket.

In November, the International Monetary Fund admitted the yuan to the SDR basket alongside the dollar, euro, pound sterling and yen, a symbolic win for China’s campaign for recognition as a global economic power.

Reporting by Sue-Lin Wong; Writing by Kevin Yao; Editing by Robert Birsel