Chinese Central Bank Denies Intention to Allow Yuan Fall Against US Dollar

© REUTERS / Kim Kyung-HoonA Chinese national flag flies at the headquarters of the People's Bank of China, the country's central bank, in Beijing, China, January 19, 2016
A Chinese national flag flies at the headquarters of the People's Bank of China, the country's central bank, in Beijing, China, January 19, 2016 - Sputnik International
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The People's Bank of China denied on Thursday media reports that it was willing to allow the national currency to drop in value against the US dollar to support the Chinese economy.

BEIJING (Sputnik) — Earlier, it was reported that the Chinese central bank planned to let the yuan decline to 6.8 yuan per US dollar before the end of 2016. The fall is planned to be gradual in order not to provoke capital flight and criticism from the country's trading partners.

"Currently, China's economy continues to maintain a medium-high growth, international competitiveness is still high, the fiscal situation is good and the financial system is stable. China has no intention to deliberately devalue the yuan to promote its trade competitiveness. There are no reasons for the long-term weakening of the yuan," the financial regulator said in a statement published on its website.

On Monday, the People's Bank of China weakened the yuan, also known as the renminbi (RMB), against the dollar by 0.91 percent following the UK vote to leave the European Union, to the lowest level since December 23, 2010.

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"Recently, some media have published false information. In these very important times, they have misled the public and brought chaos to the normal, healthy functioning of the international currency market. We strongly condemn such irresponsible news reports which violate the moral principles of journalism, and we reserve the right to take legal action against those responsible," the financial regulator added.

The central bank added that the international currency market has shown relatively high volatility and that the yuan has somewhat depreciated against the dollar amid Brexit, but that, in general, the yuan exchange rate is still stable against the basket of currencies.

China has been striving to make the renminbi an international reserve currency since the late 2000s. In late 2015, International Monetary Fund (IMF) Managing Director Christine Lagarde announced that the yuan had received reserve currency status. The Chinese currency is set to officially become a reserve currency in September and is expected to contribute to the value of the special drawing right (SDR), which the IMF uses to price its emergency loans.

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