A central bank official says the Chinese currency should remain strong over the long run.
Zhang Xiaohui, assistant governor of the People's Bank of China, says the value of the yuan has gradually returned to market levels as the discrepancy between the central parity rate and the actual trading rate has been corrected after declines in the past few days.
Zhang says there used to be a 3-percent gap accumulated between the official rate and market expectations.
The central parity rate of the yuan dropped 1.1 percent, to 6.4 against the U.S. dollar, on Thursday, narrowing from losses recorded over the previous two days.
The currency's fall comes after the PBOC adjusted the exchange rate formation mechanism on Tuesday, a move designed to better reflect market development in the exchange rate of the yuan against the U.S. dollar.
Ma Jun, Chief economist at the research bureau of the People's Bank of China, believes China's economic fundamentals can support a stable RMB.
"The effect of our macro control measures has shown positive signs: the investment on infrastructure is accelerating, property sales are increasing… all these indicate that our economy is stabilizing and picking up. The growth is much stronger than some other economic entities that faces a higher pressure on devaluation."
Another senior official, Yi Gang, dismissed media reports that Chinese authorities had demanded a 10-percent depreciation in the yuan by the end of the year in hopes of rescuing the country's slipping exports, describing such reports as "completely baseless."
Yi added the value of Yuan is determined by the market. The bank cannot intervene with this, but focuses more on improving the exchange rate formation mechanism.
