The People’s Bank of China (PBoC) on Tuesday dismissed concerns over yuan depreciation after the currency’s entry to the International Monetary Fund’s Special Drawing Rights (SDR) basket.
“There is no basis for continued yuan depreciation, and China is capable of keeping the currency basically stable at a reasonable level,” central bank vice governor Yi Gang told reporters.
Relatively strong economic growth and abundant foreign exchange reserves will underpin the Chinese currency, Xinhua news agency cited Yi as saying.
“In case of drastic fluctuation or abnormality in international balance of payments and cross-border capital flow, the central bank will not hesitate to intervene,” the PBoC official said.
The IMF will include the Chinese currency to its SDR basket from Oct 1, 2016 with a weighting of 10.92 percent, as the currency has “met all existing criteria.”
The yuan’s SDR entry is not the end of the story, Yi said, adding that China is committed to cementing the unit’s position as a global currency.
Earlier, the PBoC said in a statement that it welcomes the IMF decision to include the redback in the SDR basket, saying the move shows the IMF’s recognition of China’s economic development and reform achievements.
“The joining of RMB in the SDR basket means the international community has greater expectations on China to play an active role in the world economic and financial arena,” the statement said.
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