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China Monetary Policy Should Account for Yuan Volatility: YiCai

CHINA PRESS

China should include yuan exchange rate volatility in monetary policy frameworks such as the formation of a Financial Conditions Index (FCI), YiCai reported on Thursday citing Guan Tao, an economist from BOC International. Since the PBOC has stopped normalized intervention in the forex market, a FCI could serve as a tool to assess liquidity in the market and as a reference to future policy decisions, Guan said. A FCI would help ensure domestic economic and financial stability and would not target a specific exchange rate level, YiCai reported citing Guan.

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