Jan 21, 2019 (China Knowledge) - The State Administration of Foreign Exchange (SAFE) expects China to have a mostly stable foreign exchange market and greater balance in international payments this year.
According to SAFE, a resilient economy, ongoing reforms to open up its economy and an improving foreign exchange market will help yuan stability this year. In addition, external factors such as a slowdown in interest rate hikes by the Fed and weaker appreciation of the U.S. dollar will also bring further stability to the currency.
Finally, SAFE has also pledged to use market-based counter cyclical measures to regulate fluctuations in the country’s foreign exchange market.
Last year, China managed to achieve an equilibrium in its balance of payments through a surplus in its current account which offset a deficit in its non-reserve financial account.
SAFE expects that the country’s balance of payments will remain stable this year due to its ability to attract mid and long-term capital, resulting in a continued surplus in its current account.
At the moment, foreign investment in the country’s capital markets is still low. However, this is expected to increase with the further opening of its capital markets and greater facilitation of foreign investment.
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