Chinese Premier rejects currency devaluation allegations
The Dollar Business Bureau
Amid a barrage of accusations from the west, Chinese Premier Li Keqiang denounced allegations of currency devaluation practices to promote exports.
“China has no intention of devaluing its currency to boost exports, as the move does no good for companies’ transformation and upgrading,” he said.
As against Yuan’s average 2015 exchange rate, it depreciated 6.4% in 2016 against the dollar. Inclusion of Yuan in IMF's currency basket had given the currency's erratic movements enough power and exposure to send global tremors.
Li added that China will enforce reforms for a good exchange rate control mechanism, and continue to follow the floating exchange rate regime, allowing the supply and demand forces to play out independently of any manipulation or meddling.
Li's comments come after China's long silence on the issue, even as Trump repeatedly bashed the Chinese leaders for manipulating Yuan to achieve export competitiveness, blaming America's $347 billion trade deficit with China in 2016 on such unfair trade practices.
Li gave reassurance that China would strive to contribute to the stability of the foreign currency exchange market by maintaining RMB rates at an equillibrium within the widening floating band of Yuan.
Responsible currency management practices on China's part are long overdue. With expanding power in the global trade scenario, China owes the world a stable and reliable currency.
Regarding China's forex reserves, which had recently fallen below the $3 trillion mark, Li said that the country was poised to pay for all its imports and short-term debts.
“China’s foreign exchange reserves are way above the international standard,” he added. China has one of the largest forex reserves and has often been accused of hoarding foreign currency.