Date
19 October 2017
Bets against the yuan have risen in the new year, sending the currency to its lowest level in nearly five years against the dollar. Photo: Bloomberg
Bets against the yuan have risen in the new year, sending the currency to its lowest level in nearly five years against the dollar. Photo: Bloomberg

Chinese official says renminbi shorters will be defeated

A senior Chinese economic official warned that China has sufficient tools to defeat attacks on its currency.

Han Jun, deputy director of the office of the Central Leading Group on Financial and Economic Affairs, said betting the renminbi will slump 10 percent or more against the US dollar is “ridiculous and impossible”, the Wall Street Journal reported.

“Attempts to sell short the renminbi will not succeed,” the newspaper quoted Han as saying at a briefing at the Chinese Consulate in New York. “The expectations of markets can be changed.”

Analysts, however, said currency market interventions are costly and risk confusing investors by adding to volatility.

“These interventions work well only if they’re undertaken in the context of much broader reforms,” Eswar Prasad, a former official at the International Monetary Fund and now an economics professor at Cornell University, was quoted as saying.

Bets against the yuan have increased in the new year, sending the currency to its lowest level in nearly five years against the dollar, the Journal said.

The gap between between the official rate and the offshore market rate in Hong Kong has widened.

On Monday, the renminbi rose 0.3 percent against the dollar in China and strengthened 1.5 percent in the offshore market, to 6.5863 per dollar.

In late New York trading, the yuan was up 0.4 percent  at 6.5666 per dollar.

Han said the Chinese government is determined to keep the renminbi stable as it overhauls the market and further opens up the economy to foreign investment.

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RC/CG

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