AN advisor to China’s central bank has sought to reassure markets about the nation’s commitment to exchange rate reform in the wake of a renewed slide in the yuan and worries authorities will be moving to a more interventionist stance to curb currency volatility.

    Fan Gang, a member of the People’s Bank of China monetary policy committee, told the Securities Times that dollar fundamentals, Chinese macroeconomic conditions and changes in other currencies would be key factors affecting the value of the yuan.

    Fan emphasized that China should not take a backward step toward fixing the exchange rate. “China should not implement a fixed exchange rate again, nor peg to the dollar or even a basket of currencies,” he said.

    “China has already taken a step forward and we should continue to move forward. We should not dream of returning to a fixed rate regime.”

    The yuan is allowed to trade in a band of 2 percent above and below a midpoint rate set each trading day by the central bank. The government has pledged to move toward a market-based exchange rate.

    Fan’s comments come in the wake of a slide in the yuan to six-year lows last week. Many economists have attributed the weakness in the yuan to dollar strengthening globally, but that hasn’t tempered depreciation fears amid a tenuous economic recovery.

    The yuan has fallen about 1.6 percent against the dollar so far this month, and is on track for its worst month since August 2015 when the People’s Bank of China led a one-off sharp devaluation that spread turmoil in global markets.

    The Securities Times also quoted former central bank advisor Yu Yongding as saying the yuan would face depreciation pressure in the short term.

    “The yuan will eventually appreciate, but it is hard to predict the time,” Yu said.

    China’s capital account is closed, but authorities have been moving to stop the flow of money abroad. (SD-Agencies)