Bloomberg:

The yuan has experienced sustained pressure against the U.S. dollar this year. Despite recent data indicating a pick-up in China's economic momentum, the currency continues to grapple with a range of unfavorable external influences. How do you foresee the yuan exchange rate performance in the second quarter and what steps might the central bank take to maintain a stable exchange rate for the yuan? Thank you.

Zhu Hexin:

Thank you for your questions. As Ms. Wang Chunying said during her introduction, the RMB exchange rate has remained generally stable recently. Since the beginning of this year, as we all know, the market's expectations for a shift in the U.S. Federal Reserve's monetary policy have been recurring. The dollar index recently reached its highest point of over 106, which is a high in the past six months. The turmoil in the international financial market has intensified. Everyone has also noticed that major currencies such as the Japanese yen, euro, and British pound as well as some other emerging market currencies have experienced growing fluctuations. Affected by external shocks, the exchange rate of the RMB against the U.S. dollar has fluctuated. In fact, the RMB against a basket of currencies has remained stable, and there is still a certain appreciation on the basis of stability. As of the end of March, the CFETS (China Foreign Exchange Trade System) RMB Index was at 99.78, an increase of 2.4% compared with the end of the previous year.

The PBC and SAFE are committed to maintaining the basic stability of the RMB exchange rate, and their objective and determination will not change. The RMB exchange rate has a solid foundation and conditions to remain basically stable. The stability of the exchange rate is closely related to the economic situation. In the first quarter, the economy showed signs of recovery and improvement, reflecting the quality of our economic development and international competitiveness. In the short term, the economy had a good start in the first quarter, improving in multiple areas and accumulating positive factors. This effectively offsets external disturbances and provides support for the RMB exchange rate. Meanwhile, the maturity of our foreign exchange market continues to improve, and its resilience is increasing, which means that the trend of the RMB exchange rate will fluctuate in both directions and maintain relative balance. Looking at the medium and long term, there are even more supporting factors. China's economy has entered a stage of high-quality development, achieving balance in international payments. The depth and breadth of the foreign exchange market will further expand, and risk-neutral awareness among market participants will significantly increase. Our research shows that the risk aversion awareness of market participants is constantly strengthening, their ability to manage exchange rate risks using forex derivatives is improving, and cross-border use of the RMB is steadily growing. The basic stability of the RMB exchange rate has solid macro and micro foundations. We have the confidence, conditions and capabilities to maintain the stable operation of the foreign exchange market.

The PBC and SAFE will adopt a China-centric approach, considering both internal and external balance. We will adhere to a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies for adjustment. We will emphasize the decisive role of the market in determining the exchange rate while continuing to implement comprehensive policies and stabilize expectations. We will closely monitor changes in the foreign exchange market, firmly correct pro-cyclical behaviors, prevent the formation of one-sided expectations and self-reinforcement in the market, and guard against the risk of exchange rate overshooting. We will maintain the RMB exchange rate at a reasonable and balanced level. Thank you for your questions.