PBOC’s Vice Governor: Yuan will not be used as a weapon in trade frictions

The People’s Bank of China (PBOC) Vice Governor is on the wires now, via Reuters, responding to Trump’s comments on Yuan manipulation.

Key Points:

Yuan will not be used as a weapon in trade frictions.

Has taken note of the US comments on Yuan, hopes both sides can communicate on the issue.

Flexibility and market-driven movements of the Yuan have increased.

China economic fundamentals are solid.

China has ability to keep Yuan exchange rate basically stable at reasonable level.

China policies supporting real economy show effects

PBOC took counter-cyclical moves to stabilize fx market.

Direction of deleveraging will not change.

China's deleveraging campaign has already shown very good results, macro leverage ratio has stabilized.

Yuan exchange rate is primarily decided by market supply and demand.

Rate of increase in household leverage ratio is clearly slowing.

PBOC encourages banks to provide financial support including short-term loans to exporters facing short-term difficulties.

Effectiveness of deleveraging campaign needs to improve.