10 Jul 2014
China agrees to reduce intervention in the foreign exchange market
FXStreet (Łódź) - After two days of talks between US and Chinese officials, a joint statement was released in which China vowed to reduce its FX intervention when the conditions will permit it.
Following the negotiations led Treasury Secretary Jack Lew and China's Central Bank Governor Zhou Xiaochuan, both sides pledged on Thursday to avoid sustained, disorderly and competitive currency devaluation.
China also vowed to increase FX flexibility to reflect economic fundamentals and to push forward FX and interest rate reform.
"The direction of our reforms is clear: we hope that the exchange rate can be kept basically stable, at a reasonable and balanced level through reforms," Zhou told reporters on Thursday.
Jamie Coleman comments on FXBeat: "Agreements are easy. Implementation is hard. This is the beginning of the story, not the end. But if China does liberalize its exchange rate regime the big loser will be the euro.GBP. AUD and others will be impacted as well."
"Less intervention to weaken the CNY will mean less reserve diversification overall. China buys dollars against it's local currency and then sells a portion of those dollars against the other currencies."
Following the negotiations led Treasury Secretary Jack Lew and China's Central Bank Governor Zhou Xiaochuan, both sides pledged on Thursday to avoid sustained, disorderly and competitive currency devaluation.
China also vowed to increase FX flexibility to reflect economic fundamentals and to push forward FX and interest rate reform.
"The direction of our reforms is clear: we hope that the exchange rate can be kept basically stable, at a reasonable and balanced level through reforms," Zhou told reporters on Thursday.
Jamie Coleman comments on FXBeat: "Agreements are easy. Implementation is hard. This is the beginning of the story, not the end. But if China does liberalize its exchange rate regime the big loser will be the euro.GBP. AUD and others will be impacted as well."
"Less intervention to weaken the CNY will mean less reserve diversification overall. China buys dollars against it's local currency and then sells a portion of those dollars against the other currencies."