MNI BRIEF: Yuan Remains Stable, Capital Flows In Control: SAFE

China's yuan will remain basically stable in the second half as the economy is improving and the trade surplus stays robust, said Wang Chunying, spokeswoman of the State Administration of Foreign Exchange, noting the regulator is keenly watching the tightening moves of the Federal Reserve.

The yuan has been more resilient as major currencies have weakened against dollar and capital outflows are controllable as half of foreign investors in the China bond market are long-term international institutions including central banks, Wang said, pointing out the yuan exchange rate will continue to be flexible, which helps encounter the overseas uncertainties, (See: MNI: Yuan Seen Boosted In Q4 If U.S. Enters Recession-Analysts).

The increase of China foreign debt is in line with GDP growth and short-term foreign debt just takes 45% of China’s huge forex reserves, which means the capital outflow risks due to short-term debt payment is low, she said.