SHANGHAI (Reuters) - Depreciation pressures on the Chinese yuan have diminished due to more robust economic growth and rising foreign exchange reserves, a senior central bank adviser said in an interview with official state media published on Tuesday.
“Market confidence in the renminbi (yuan) is strengthening, while expectations of devaluation are getting ever weaker,” Huang Yiping, a member of the People’s Bank of China’s monetary policy committee, told the Financial News.
China’s foreign exchange reserves edged up in June for a fifth consecutive month as capital outflows eased in the face of tighter controls over moving funds out of the country and a pause in the U.S. dollar’s rally.
China will also look to give its currency greater flexibility, expand its free floating range and reduce intervention in the foreign exchange markets, Huang said.
The central bank has long called for greater long-term flexibility in the yuan as China pushes ahead with its plan to further internationalize its currency.
Huang also said that while there were still downward risks to China’s economic growth, the pressure had eased and there should be “no problem” for the country to hit around its target of around 6.5 percent full-year GDP growth.
China’s economy expanded by a faster-than-expected 6.9 percent in the second quarter from a year earlier, giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year.
Huang added though that there was still many risks in the financial markets, a key focus for Beijing as it looks to stamp out risky behavior by corporations and lenders. He pointed to shadow banking, online finance and local government financing as the main three areas of uncertainty.
China’s PBOC is set to play a bigger role managing financial risk and coordinating with the various financial regulators, President Xi Jinping said on Saturday.
Reporting by Adam Jourdan; Editing by Kim Coghill