MNI BRIEF: Fed Policy Shift To Have Limited Yuan Impact: Pan

Any policy shift by the Federal Reserve is expected to have a limited impact on the yuan forex market, which will remain stable at a reasonable and balanced level, Pan Gongshen, deputy governor of the People's Bank of China, told the Annual Conference of Financial Street Forum Wednesday.

The differential between US economic growth and its counterparts and their policies are both smaller than last time when the Fed tightened, which will restrain the US dollar's rally, said Pan, who is also head of State Administration of Foreign Exchange. Factors including the steady economic fundamentals, the increased flexibility of the yuan and the improved structure of capital inflow will help offset any external shock, he pointed out.

Emerging markets also face less pressure of capital outflow this time around as inflows in recent years have been limited and several central banks have already hiked rates this year, he noted. The PBOC and SAFE have plenty of tools and experience to deal with external shocks and have prepared for overseas changes, he added, noting regulators will continue to monitor the foreign exchange market and prevent any cross-border liquidity risk.