Chinese yuan rises after PBOC move

The Chinese yuan jumped on Friday after the country’s central bank took action to support the currency after a recent sell-off, vowing to rein in speculation and calling for more stability in the foreign exchange market.

According to a statement released on Friday, the People’s Bank of China and the currency regulator will strengthen market expectation guidance and take action to correct procyclical and one-sided market behavior when necessary.

In offshore trade, the yuan rose 0.5 percent to 7,0121 against the dollar, retreating from 7,0750, its lowest level since December.

Simon Harvey, head of FX analysis at Monex Europe in London, said: “The announcement was certainly a surprise, given that the daily pegs haven’t really put much pressure on this week’s CNY depreciation. They’re not happy with the pace of currency depreciation given the marginal improvements in key indicators. ” said.

The PBOC’s move came as weaker-than-expected Chinese economic data weighed on the yuan and the dollar appreciated overall. The announcement comes after a meeting Thursday of the PBOC, officials of the State Foreign Exchange Administration and the China Currency Committee, a market-leading body.

According to the statement, officials called for market stability and reduced sharp movements in the exchange rate.