CBIRC official downplays RMB downtrend

A continuous and long-term unilateral depreciation of the Chinese yuan against the US dollar is unlikely, and financial market participants must not bet on that, if they are to avoid losses, an official of the China Banking and Insurance Regulatory Commission said on Friday.

China's huge trade surplus and foreign direct investment will provide stability to the renminbi exchange rate, the official said.

Fluctuations in the renminbi exchange rate still remain within a reasonable range. A continuous increase in the renminbi exchange rate elasticity while the Chinese currency's exchange rate remains basically stable will be conducive to stabilizing foreign trade, increasing long-term foreign capital inflows, preventing excessive capital outflows, and giving better play to the role of the exchange rate in adjusting the balance of payments, the CBIRC official said, adding the overall performance of the Chinese currency is solid.

The latest RMB exchange rate pullback is a normal market reaction to a rise of the Chinese currency against the US dollar for a fairly long period since last year, the official said.

Short-term fluctuations in the RMB are mainly affected by market sentiment whereas the long-term trend is determined by economic fundamentals. As China continuously deepens reform and opening-up, its economy will have tremendous room for growth.

The country's per capita GDP and aggregate economic volume will increase, which will provide a solid foundation for the internationalization of the RMB and the rise of the RMB against the US dollar, the CBIRC official said.