Chinese Yuan: PBoC stance and valuation debate guide currency path – MUFG
Halpenny highlights a new PBoC document defending China’s FX policy and rejecting claims that CNY drives its trade surplus, instead pointing to manufacturing competitiveness. He notes BIS REER data showing a 20% fall from the 2022 peak and IMF estimates of 12–20% undervaluation, suggesting CNY is undervalued but only partly explains China’s export strength.
The People's Bank of China (PBoC) has issued a document defending its foreign exchange policy, countering claims that the Chinese yuan (CNY) is responsible for the nation's trade surplus. Instead, the PBoC emphasizes manufacturing competitiveness as the primary driver of China's export growth. While the yuan is acknowledged to be undervalued, the extent of this undervaluation is a subject of debate. Despite this, the PBoC's stance suggests that China is not ready to make substantial adjustments to its currency.
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