PBOC’s Yi Says China Prepared for Currency War, Xinhua Reports
China is “fully prepared” for a currency war should one happen, central bank Deputy Governor Yi Gang said in Beijing yesterday, the official Xinhua News Agency reported.
“China is prepared,” Yi was quoted as saying by the agency, which gave no further details about where he spoke. “In terms of both monetary policies and other mechanism, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.”
Finance ministers and central bankers from Group of 20 nations meeting in Moscow last month sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war. Their comments followed a slump in the yen against the dollar and euro spurred by Japanese Prime Minister Shinzo Abe’s campaign for more monetary easing to fight 15 years of deflation.
The yen has fallen about 11 percent against the U.S. dollar in the past three months in anticipation of greater stimulus by the new Japanese government.
A currency war can be avoided if policy makers in major countries observe the consensus reached at the G-20 meeting that monetary policies should be aimed at domestic economies, Yi said, according to the English-language Xinhua report.
China’s foreign-exchange regulator, which is headed by Yi, warned in a report this week that quantitative easing in developed nations will lead to capital inflows into emerging markets and that policy easing can’t solve all of a country’s economic problems.
China’s yuan rose 0.18 percent this week, the first gain since the five days ended Jan. 18. It slipped 0.04 percent to close at 6.2237 per dollar yesterday in Shanghai, according to prices from the China Foreign Exchange Trade System, after reports indicated the country’s manufacturing growth slowed last month.
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