The latest round of yuan volatility in the market is normal and there is no need to read too much into the movement, a financial regulator commented on Monday amid speculation that the recent fall in the yuan's value may be engineered by authorities.
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The value of the Chinese currency Renminbi, or the yuan, has fallen against the U.S. dollar for several consecutive trading days since Feb. 18, prompting speculation that the government may be deliberately keeping down the currency to deter investors betting on a stronger trend.
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Compared with other currencies, the yuan's fluctuation is usually small, which makes the recent movements look abnormal, said Yi Gang, head of the State Administration of Foreign Exchange.
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"China's international balance of payments is generally moving in a more balanced direction, while the fluctuation in the foreign exchange market is normal," he said, adding two-way fluctuations will be the new norm.
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He stressed that China will continue market-oriented reforms in the exchange mechanism.
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In China's foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day.
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It started rising against the U.S. dollar from 8.11 in July 2005, when China reformed its exchange rate mechanism. Appreciation quickened in 2013 and its value rose 3 percent, compared with 0.25 percent in 2012.
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The latest round of yuan volatility in the market is normal and there is no need to read too much into the movement, a financial regulator commented on Monday amid speculation that the recent fall in the yuan's value may be engineered by authorities.
