The Chinese renminbi experienced sharp fluctuations in both onshore and offshore markets recently. However, economists believe that it will remain stable in the long run backed by its sound economic fundamentals.

On June 7, the offshore renminbi weakened to 6.96 yuan per U.S. dollar, and on June 10, the exchange rate of the onshore Chinese yuan fell to 6.93 yuan per U.S. dollar.

The People's Bank of China (PBC) announced on June 11 it would issue central bank bills in Hong Kong in late June to improve the yield curve of the renminbi bond in Hong Kong. Issuing central bank bills in the offshore market is conducive to adjusting renminbi liquidity and raising the cost of shorting the renminbi.

The China-U.S. trade friction has brought great uncertainties to the market, which has led to recent yuan fluctuations, according to E Zhihuan, chief economist at the Bank of China (Hong Kong).

Liu Guoqiang, Vice Governor of the PBC, said that the country is "capable and confident" of keeping the exchange rate generally stable on a reasonable and balanced level considering its sound economic fundamentals, great resilience and huge potential.

This year, the sound fundamentals of the Chinese economy have provided a solid base for the yuan to remain stable in the long run.

Leading economic indicators, including the manufacturing purchasing managers' index, consumption and foreign trade, have shown that China's economic performance has continued within a reasonable range and maintained stable momentum.

China's foreign trade of goods climbed to 12.1 trillion yuan ($1.76 trillion) in the first five months of the year, up 4.1 percent year on year, according to data from the General Administration of Customs of China (GACC).

In addition, the country's export markets are increasingly diversified. China's trade with countries participating in the Belt and Road Initiative totaled 3.49 trillion yuan ($505.54 billion) in the first five months, up 9 percent year on year, the GACC said.

"Considering the two fundamental factors of foreign exchange reserves and trade surplus, China, without a doubt, could keep its exchange rate stable," said Zhao Qingming, chief economist at the Institute for Financial Derivatives, the research arm of the China Financial Futures Exchange.

China's trade surplus increased 45 percent to 893.36 billion yuan ($129.41 billion) during the January-May period, GACC data showed.

China's foreign exchange reserves grew to $3.1 trillion at the end of May, marking the highest level in nine months, according to the State Administration of Foreign Exchange.

The country also has plenty of market and policy tools to stabilize its currency and efficiently prevent speculators from taking advantage of short-term exchange rate fluctuations, said Lian Ping, chief economist with the Bank of Communications.

China should promote the marketization of the exchange rate formation mechanism, allowing the market to play a decisive role, said Zhou Jingtong, a senior researcher with the international finance institute of the Bank of China.

At the same time, the country should retain the means of counter-cyclical factors and issuance of central bank bills in offshore renminbi markets to maintain a stable exchange rate and deter overseas short sellers, Zhou said.

This is an edited excerpt of an article by Xinhua News Agency

Copyedited by Rebeca Toledo

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