Investing.com - People's Bank of China chief Zhou Xiaochuan on Friday said that underlying fundamentals don't warrant a sustained weakening of the Chinese yuan and added there was room on the policy side to do more.
Speaking at the Institute of International Finance's G20 conference, Zhou affirmed that China's current account surplus, low inflation and decent growth offer "no basis for persistent renminbi (yuan)depreciation from the perspective of fundamentals."
At the same time, he promised, "China will continue to implement so-called 'prudent' monetary policy... to keep adequate liquidity and to maintain proper growth of credit and aggregate demand."
There is still "some monetary policy space and monetary policy tools" to counter downside risks, he said.
"The Chinese economy has entered a so-called sort of 'new normal,'" he said.
China's current monetary policy is prudent with a slight easing bias, said the Chinese central bank, the first time in almost eight years it has suggested its policy bias is toward easing, according to a statement issued before the press conference by Zhou.
The last time the Chinese government attached the word "easing" to its monetary policy was back in 2008 during the global financial crisis when Beijing adopted "appropriate loose monetary policy" stance. The Chinese government shifted to its current "prudent" monetary policy in December 2010 and has stuck to this stance until now.
"Given current domestic and world economic conditions, the PBOC's monetary policy is in a status of prudent with easing bias. We need more observation and to make dynamic adjustments," said the PBOC.