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Tuesday, August 25, 2015, 21:13

No basis for yuan's continued depreciation: Li

By Xinhua

BEIJING - Chinese Premier Li Keqiang said on Tuesday there is no basis for continued depreciation of the Chinese currency yuan (the RMB), and the exchange rate will be kept "basically stable at an adaptive and equilibrium level."

Li made the remarks while meeting with First Deputy Prime Minister of Kazakhstan Bakytzhan Sagintayev in Beijing.

Li said that China has recently improved the quotation regime of the RMB central parity as an "appropriate response" to international financial market development.

"Such adjustment was also made as part of China's ongoing reform efforts," he noted.

On Aug 11, the People's Bank of China (PBOC), the central bank, announced that daily central parity quotes reported to the China Foreign Exchange Trade System before the market opens should be based on the closing rate of the inter-bank foreign exchange market on the previous day, supply and demand in the market, and price movement of major currencies.

Li said the complicated world economic situation and market turbulence had some impact on China's economy. However, the fundamentals of China's economy remained stable, the economy is running within a reasonable range, and positive elements supporting a good development of the real economy is accumulating.

There was still room for further innovation and macro-control, and domestic demand was yet to be increased, Li noted.

He said China was able to complete the targets for yearly economic development as some measures including stabilizing economic growth, adjusting economic structure, unleashing market vitality by mass entrepreneurship and innovation, improving people's livelihood and preventing risks took effect.

This will be an important contribution for the recovery of the world economy, Li added.

Earlier, analysts said the devaluation of the renminbi triggered the plunge in world stock markets and the weakening of bulk commodities and currencies in other countries.

A researcher with PBOC on Tuesday blamed wide expectation of a Fed rate rise in September for the global market rout.

Yao Yudong, head of the bank’s Research Institute of Finance, said the expected Fed rate hike next month had been the "trigger" for the wild market swings.

Analysts worried that the Fed rate hike could accelerate the plunge of US stocks and trigger a sell-off of assets worldwide and even a new global credit crisis.

Yao said the Fed should remain patient before the US inflation reaches 2 percent.

Li Qilin, analyst with Minsheng Securities, said the small devaluation of renminbi could have slightly weighed on stock markets, but it could not explain the huge sell-off in the United States and other countries.

Li said the liquidity crunch is a bigger culprit.

The global rout has little to do with economic fundamentals and the Asian financial crisis would not be repeated, Capital Economics said in a research note.

But it said if the market plunge continues worldwide, the Fed might postpone its rate hike.

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