Ding Zhijie, director of the Foreign Exchange Research Center of the State Administration of Foreign Exchange, delivers a keynote speech at the Tsinghua PBCSF Global Finance Forum in Beijing on May 20, 2023. Photo: Courtesy of the forum organizer

Due to the US rapid interest rate hikes, the exchange rates of some Asian currencies including Japanese yen, Malaysian ringgit and Indonesian rupiah, have hit or even been weaker than the lows seen during the 1997-98 Asian Financial Crisis, a Chinese official said on Saturday.

The imbalances between advanced US and European economies and peripheral developing economies have become more prominent, Ding Zhijie, director of the Foreign Exchange Research Center of the State Administration of Foreign Exchange (SAFE), said at the Tsinghua PBCSF Global Finance Forum in Beijing on Saturday.

The global monetary and financial system is centered on the US dollar, while Fed's rapid increasing of the interest rates has led to a strong dollar cycle which puts emerging countries under huge pressure, Ding said.

As for China, though its currency yuan has recently depreciated below 7-per-dollar threshold for the first time of the year, economists noted that it was likely a transient phenomenon.

In fact, the yuan will be mainly on an appreciation path this year which will enhance the attractiveness of the yuan assets, Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Saturday.

Since beginning of the year, foreign investors have been increasingly weighted toward Chinese stocks and were continuing to pour into the market, Yang noted.

Though the country's economic recovery faces some challenges in the short term, there are favorable conditions for a high-quality economic development of the country, Ding noted.

For starters, the colossal market economy remains resilient, with a continuously improving economic structure. In 2022, China's manufacturing value added accounted for nearly 30 percent of the world's total.

Amid the increasing volatile global financial environment, China has adopted a prudent monetary policy and its macro-control has remained independent. In the meantime, China's international balance of payments and the operation of its foreign exchange sector have remained strong and stable. The two-way fluctuation of Chinese yuan's exchange rate has become more flexible, Ding noted.

The breadth and depth of China's foreign exchange market has been expanding day by day, and it has the ability to balance itself. The yuan's exchange rate also has the power and mechanism to correct deviations, and can maintain basic stability at a reasonable and balanced level, according to a statement released by the People's Bank of China (PBC), the country's central bank, on Friday.

The PBC and the SAFE will enhance supervision, management, monitoring and analysis, strengthen guidance on market expectations, correct pro-cyclical and unilateral behaviors when necessary, and curb speculation, read the statement.

Global Times