China’s central bank said that the country has “no intention or need to participate in a currency war” with Europe, the US and Japan, but admitted that further currency volatility was likely following last week’s move to devalue the yuan.
Ma Jun, chief economist at the People’s Bank of China (PBoC) said that the bank planned to limit its interventions to “exceptional circumstances” and to counteract “exceptional volatility”. He added that last week’s devaluation of the yuan by nearly 2% lessened the likelihood of similar moves in the future.
However, Ma said that “two-way volatility” could be expected, with the yuan appreciating and depreciating accordingly depending on the progress of the Chinese economy.
He still expects this year to record growth of around 7%, in line with the government’s forecast.
The unexpected devaluation of the yuan was regarded as an attempt to make China’s exports more competitive and triggered weakness in other Asian currencies on fears that other central banks in the region would follow the PBoC’s move.