A staff member displays the banknotes and coins included in the 2019 edition of the fifth series of the renminbi at an Industial and Commercial Bank of China (ICBC) branch in Beijing, capital of China, Aug. 30, 2019.(Photo: Xinhua)

 
The onshore yuan dropped by more than 300 basis points to about 6.45 per US dollar during intraday trading on Thursday amid economic downward pressure, but analyst said China's sound economic fundamentals will support a stable yuan in the long-term.

The yuan's exchange rate hit its lowest point since October 2021.

On Thursday, the central parity rate of the yuan weakened 102 basis points to 6.4098 against the dollar, according to the China Foreign Exchange Trade System.

"The depreciation pressure on the yuan's exchange rate mainly comes from economic downward pressure amid multiple COVID19 flare-ups across the country, while the dollar gains strength on the market," Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Thursday.

However, there is no basis for long-term depreciation of the Chinese currency, Dong said, noting that China's sound economic fundamentals will support the yuan's exchange rate to maintain stable at a reasonable level.

Despite headwinds of COVID-19 resurgences, supply chain snags and growing external uncertainties arising from the Russia-Ukraine conflict, China's economy posted 4.8 percent year-on-year growth in the first quarter of 2022.

Experts interviewed by the Global Times said they are confident that the country will be able to achieve the annual economic growth goal of around 5.5 percent, with the boost of a policy mix including proactive monetary and fiscal policy support.

Global Times