BEIJING, May 16 .The central parity rate of the Chinese currency renminbi, or the yuan, continued its recent weakening streak Thursday, fueling concerns over the devaluation of yuan.
On Thursday, the yuan’s central parity rate weakened 39 basis points to 6.8688 against the U.S. dollar, following the 284-basis-points plunge Wednesday, according to the China Foreign Exchange Trade System.
China’s sound economic fundamentals, stable supply and demand of the forex market and other factors, however, will continue to give strong support for the yuan to remain generally stable on a reasonable and balanced level, said a report carried in Economic Information Daily Thursday.
Data showed that China’s economic performance has continued within a reasonable range and maintained stable momentum this year.
In the first four months, China’s industrial output increased 6.2 percent year on year, the same pace as that for the whole year of 2018, while fixed-asset investment also maintained a steady 6.1-percent growth, laying a solid foundation for the yuan’s exchange rate to remain stable.
Panic buying has not yet occurred in the onshore market, even with the fluctuated exchange rate in the latest trading days as net forex sales have narrowed remarkably this year, the paper reported.
Meanwhile, China is consistently pushing forward the further opening-up of the financial market.
Reforms of the QFII and RQFII programs, which allow overseas institutional investors to move money into China’s capital account to encourage controlled flows, are advanced by China’s forex regulators to simplify access management and expand the scope of investments.
Global index provider MSCI also announced earlier this month that it will raise the inclusion factor of all large-cap China A-shares in the MSCI indexes from the current 5 percent to 10 percent.
The move is expected to lead to more capital inflows into the Chinese market, adding to the supportive forces that stabilize the exchange rate of yuan.
In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.