There is no basis for the Renminbi, or the yuan, to continue to depreciate, said Chen Yulu, deputy governor of the People's Bank of China, on Tuesday.
The exchange rate of the yuan will remain basically stable against a basket of currencies, he said. China has a relatively healthy trade balance and relatively low inflation, which are both favorable conditions for a stable yuan, Chen said. The yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day in China's spot foreign exchange market.
The central bank's remarks follow the G20 Finance Ministers and Central Bank Governors Meeting, which was held in Shanghai on Friday and Saturday. China's central bank described its monetary policies as "prudent with a slight easing bias," shifting from the "prudent" of recent years. The central bank announced on Monday that it will lower the reserve requirement ratio for commercial banks by 0.5 percentage points, effective Tuesday, the latest move to bolster growth.
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