BEIJING: China on Friday defended its currency exchange rate policy after US Republican presidential candidate Donald Trump called for higher tariffs on Chinese goods to offset RMB devaluation.
“China opposes currency war, or competitive devaluation,” Foreign Ministry spokesperson Hong Lei said at a regular news briefing when asked to comment on Trump’s remarks.
China will keep the RMB exchange rate “basically stable at a reasonable and balanced level” as it seeks to continue financial reform and perfect the currency exchange rate formation mechanism, Hong said.
Hong reaffirmed that China has always adhered to a managed floating exchange rate system, which is market-oriented and formulated in reference to a basket of currencies.
The central parity rate of the RMB, or yuan, has weakened against the US dollar since August last year.
To reduce the market’s fixation on the yuan-dollar rate and better reflect the market, China Foreign Exchange Trade System (CFETS) began to release a yuan exchange rate composite index in December that measures the currency’s strength relative to a basket of 13 currencies, including the US dollar, euro, and Japanese yen.
On November 30, the index stood at 102.93, which means the yuan has appreciated 2.93 percent compared to the level at the end of 2014, the CFETS said.
