China will respond to exchange rate fluctuation risks to support exporters: Commerce ministry

BEIJING: China’s commerce ministry on Thursday (Dec 21) said it will work with the central bank and across government to manage exchange rate fluctuations over 2024, should the yuan start to rebound against the dollar and make already weak Chinese exports more expensive.

Manufacturers in the world’s second-largest economy have struggled for buyers at home and abroad most of this year. While exports grew for the first time in six months in November, analysts warned factory owners were being aided by a weak yuan and likely offering unsustainable discounts to find buyers.

“We will work with the People’s Bank of China, State Adminstration of Foreign Exchange and other departments… to effectively deal with the risk of exchange rate fluctuations,” said Shu Jueting, a commerce ministry spokesperson.

“(We) will support enterprises through hedging and cross-border renminbi settlement,” she added.

Global investment banks see the yuan facing continued downside pressure in the first half of 2024 before turning around over the following six months on views that the US Federal Reserve will begin to cut interest rates by then.