• Yuan is close to equilibrium level, PBOC official says
  • ``No systemic risk'' in stock market; leverage has decreased

Volatility in China’s stock markets is nearing its end, a central bank official said, after Group of 20 finance chiefs flagged concerns about potential global spillovers.

The Chinese government has intervened to prevent the “free fall” of the stock market even as it feels an adjustment is “normal,” Zhu Jun, Director-General in the People’s Bank of China’s international department said in an interview on Saturday in Ankara.

The Shanghai Composite Index has tumbled 39 percent since June 12, when the gauge reached its highest level in more than seven years. China’s surprise decision to revalue the yuan as it tried to contain the market turmoil caused the currency to drop the most in 21 years last month, triggering exchange-rate declines elsewhere in the emerging world on concern that a weaker yuan will hurt countries exporting to China.

“We think it’s pretty close to the end,” Zhu said, referring to the stock-market volatility. “To some extent the leverage in the market has been decreased substantially and we think there would be no systemic risk.”

The Chinese delegation said its currency move wasn’t an attempt to grab exports from its international competitors and that explanation was accepted by the other nations, according to an international official who participated in the talks.

“We think it is quite close to the equilibrium level and we think with time the pressure will be alleviated and the market sentiment will be improved,” said Zhu, referring to the yuan.

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