- Recent fluctuations in China's yuan are due to global market volatility, but it remains basically stable, a Beijing official said.
- The currency can withstand the US Fed's policy changes, according to a spokesperson at China's foreign exchange bureau.
- Offshore prices for the yuan just saw the biggest weekly drop against the dollar since 2015.
China's yuan is set for its biggest weekly drop against the dollar in nearly seven years, but Beijing shrugged off concerns over the slump.
"With strengthened resilience in the foreign exchange market, China has the foundation and conditions to adapt to the [US] Fed's policy adjustment," Wang Chunying, a spokesperson of the State Administration of Foreign Exchange, said at a Friday briefing. She noted that the yuan's recent swings have been "stable and healthy."
With rising US bond yields, an increasingly hawkish Fed, and concerns over China's economic outlook, investors have rushed back to the greenback. The offshore price for the yuan has fallen 2.4% over the week to 6.53 per dollar, Bloomberg data showed, marking its worst weekly drop since 2015.
The surge in US yields has prompted investors to pull out from China's bond market, with the country seeing a record pace of outflows of foreign investment in March following February's exodus, according to Bloomberg.
But China's currency will be fine, Wang said, as the country has resilient economic fundamentals. She ascribed recent volatility to global market fluctuations and changes in supply and demand.
"China has been able to implement a normal monetary policy and its financial system is relatively stable and independent. Uncertainties from abroad would have a smaller impact on the yuan exchange rate," Wang said.
The foreign exchange market will continue to be stable, she added, given China's trade surplus, low foreign debt risks, and flexibility of the yuan.
The International Monetary Fund recently cut its 2022 economic growth forecast for China from 4.8% to 4.4%, as stringent COVID-19 lockdowns paralyze activity across major cities.
Amid the slowing economy, the proportion of total transactions made in yuan also has fallen, hitting its lowest point since November 2021.