According to Ma Jun, chief economist at China’s central bank, the yuan will probably move in both directions in the future following last week’s devaluation as the economy stabilises. A such market-oriented currency price for the yuan will help to avoid excessive deviation from the equilibrium level and significantly reduce the possibility of sudden and non-controllable fluctuations, Ma said in an e-mailed statement on Sunday, adding that the economy will probably grow about 7 percent this year.

Currency News

The yuan halted a three-day slide on Aug. 14 following its first major devaluation since 1994 after the central bank said it will intervene to prevent excessive swings. This is part of the results that aim to acquire more financial stability for the Chinese markets and also helping the Chinese currency to enter the world basket of the reserve currencies. The yuan’s drop last week and its increased flexibility could help in advance to reduce the possibility of similar adjustments in future, Ma said.

The People’s Bank of China (PBOC) shocked global markets by devaluing the yuan CNY=CFXS by nearly 2 percent on Aug. 11. The PBOC called it a free-market reform but some saw it as the start of a long-term yuan depreciation to spur exports. The central bank would move only in exceptional circumstances to iron out excessive volatility in the exchange rate, Ma said.

China’s decision on Aug. 11 to allow markets greater sway in setting the currency’s level triggered the biggest selloff in 21 years and roiled global markets.