MNI POLICY: PBOC To Stabilize FX Mkt Expectations: Dep Gov Pan

     BEIJING (MNI) - The People's Bank of China will continue to use

macro-control policies to stabilize market expectations for the yuan exchange

rate, Pan Gongsheng, deputy governor of the PBOC, said Friday. 

     However, speaking at a forum in Beijing, Pan did not respond directly to a

question as to whether the PBOC would take further measures to stop the yuan

trading above 7 against the U.S. dollar. 

     ---Pan stressed that the yuan's performance this year was, overall, stable

and healthy in comparison to most non-dollar currencies, both developed and

emerging. He noted that the yuan has dropped 9% year-to-date, as the dollar

index strengthened 5%. The EM currency index dipped more than 11%, sterling was

down by 4.6% and euro 5%. 

     --Underlining recent comments from Chinese authorities, Pan said China will

not devaluate the yuan on a competitive basis, or as a tool to deal with

external 'disturbances'. 

     "China's economic fundamentals are stable and healthy, the macro leverage

rate is basically stable, risks of fiscal finance are controllable,

international balance of payment is overall balanced, forex reserves are

abundant, which will provide support for the yuan to remain basically stable,"

Pan stressed. 

     --The impact on the China-U.S. trade war on both the forex market and

cross-border capital flow is controllable, Pan stressed, as shown from the

stable growth of trade, foreign investment, cross-border financing of companies,

outbound investment growth, individuals' purchase of foreign currencies, and the

yuan exchange rate. 

     --But he stressed that the PBOC will continue to monitor the impact of the

trade war closely and take measures if needed, without elaborating further. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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