China has no need to weaken yuan for trade edge, says PBOC governor

The renminbi is currently trading around the midpoint of its range in recent years, and China has neither the need nor the intention to weaken the currency to gain a trade advantage, Pan Gongsheng, the governor of the People's Bank of China, the country's central bank, said on Friday.

Pan made the remarks at a news conference on the sidelines of the fourth session of the 14th National People's Congress.

Since the beginning of this year, the yuan has appreciated against the US dollar, supported by China's improving economic fundamentals, a weaker dollar index and seasonal foreign exchange settlements by enterprises, Pan said.

"At present, the bilateral yuan-dollar exchange rate is around the midpoint of its range in recent years," he said, adding that China has no need or intention to obtain trade competitiveness through currency depreciation.

Pan reiterated that the central bank will uphold the principle that the market plays a decisive role in exchange rate formation, maintain exchange rate flexibility, strengthen expectation management and keep the yuan generally stable at a reasonable and balanced level.

"In specific circumstances, macroprudential management tools would be used to correct herd behavior and negative self-reinforcing market dynamics," he said.

Geopolitical conflicts have heightened risk-averse sentiments and triggered fluctuations in major currencies recently, Pan said.

More than 60 percent of China's import and export trade is now either settled in renminbi or hedged with foreign exchange risk management tools, reducing the impact of exchange rate fluctuations on businesses, Pan said, adding that this proportion is likely to further increase this year.