China Stats Bureau Spokesperson cites economic recovery, major state-owned banks sell Dollars to defend Yuan

Anil Panchal FXStreet

Early Tuesday morning, Reuters cites an anonymous source to state that China's major state-owned banks were seen selling US Dollars to buy China Yuan (CNY) in the onshore spot foreign exchange (Forex) market. The news came in after the People’s Bank of China (PBoC) surprisingly cut the benchmark rates and fueled the USD/CNY to the yearly high.

Also read: PBOC sets USD/CNY reference rate at 7.1768 vs. 7.1686 previous

On the other hand, China’s downbeat prints of Retail Sales and Industrial Production for July also fueled the USD/CNY prices before China State Bureau Spokesperson Fu Linghui crossed wires, via Reuters, to defend the CNY traders.

The diplomat initially conveyed the news of stopping youth jobless data from August while citing the readiness to further improve employment statistics.

However, major attention was given to the statements suggesting China’s economic recovery faces challenges, as well as the expectations signaling further declines in the Producer Price Index (PPI) data.

“Risks for property developers could be gradually resolved due to policy optimization,” noted China State Bureau Spokesperson.

It’s worth noting that Chinese diplomat also accepts the fact that the employment pressure exists and showed readiness to stabilize employment.

Above all, China’s Linghui ruled out deflation woes while stating that there is no deflation in China, as well as saying that there will be no deflation in the future. In his defense, the policymaker also said that the Year-on-Year (YoY) fall in the Consumer Price Index (CPI) in July could be temporary while adding, “CPI could gradually rebound.”

Also read: China’s July Retail Sales and Industrial Production ease, keeping AUD/USD bears on the lookout

Latest comments

The following are the latest additional comments from China Stats Bureau Spokesman, per Reuters:

China's economy to improve as policies gain traction.

World economy could be better than expected in rest of 2023, which could help China's foreign trade.

Expects China's economy to maintain steady operations in the second half of the year.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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