32 BEIJING REVIEW AUGUST 15, 2019 http://www.bjreview.com
BUSINESS
T
he central parity rate of the yuan weak-
ened 43 basis points to 7.0039 against
the U.S. dollar on August 8, closing lower
for the sixth consecutive day and reaching a
record low not seen since April 21, 2008. Three
days earlier, both the onshore and offshore
yuan weakened past the key psychological level
of 7 per U.S. dollar.
According to the People’s Bank of China
(PBC), the country’s central bank, the weakening
of the yuan can be attributed to U.S. unilateral-
ism and protectionism as well as expectations
of additional tariffs on Chinese goods.
In the latest move, the United States has
threatened to impose additional 10-percent
tariffs on $300 billion worth of Chinese imports
starting next month.
Mounting downward pressure on China’s
economy and concerns over rising financial
risks have also contributed to the currency’s
weakening, but the fall does not suggest that
the yuan is headed for a dramatic drop because
China’s economic foundations are stable, Zhang
Ming, chief economist at Pingan Securities, said.
Since the country has adopted a flexible
yuan exchange rate determined by market sup-
ply and demand, the 7 yuan per dollar mark is
not a warning line but more of an average level,much like water level marks in a reservoir, which
means both a rise and fall are the norm, the PBC
highlighted in an online statement on August 5.
Despite its weakening, the yuan will main-
tain its stability and strength against a basket of
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and capability to keep the yuan exchange rate
stable, it said.Breaching the mark
As the central bank stressed, the yuan’s
exchange rate is determined by long-term
economic fundamentals, although it has been
influenced by market supply and demand asFlexible Exchange
The yuan is ex pected to remain stable despite recent depreciation
By Li Xiaoyang
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