People’s Bank of China Say No Need to Buy US Dollars

Zhou Xiaochuan, governor of the People’s Bank of China said on Saturday he expected the RMB exchange rate to normalize and the market to resume rationality “after some time” – to ensure no black swan events.

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“I do not see any urgency to buy US dollars,” Zhou told reporters in the National People’s Congress (NPC), the national legislature, on Saturday. Zhou said that he respects the trend is a return to normality and rationality, after “some volatility.”

Zhou comments come as the confidence in the world’s second largest economy tides. Chinese leaders have set a growth target of 6.5-7% per year, the lowest in nearly two decades.

Zhou said that the bank had to take “reasonable and slightly loose” monetary policy in terms of slowing down in China, but also to avoid “excessive” monetary measures to stimulate growth, such as devaluation.

The devaluation of the yuan last year triggered accusations that China was involved in a currency war, to support the reduction of trade. Zhou denied the charges and said that China is in no hurry to devalue its currency to boost exports.

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