The discussion of monetary policy stimulus withdrawal is on the table and it should be done sooner rather than later, the People’s Bank of China Vice Governor Liu Guoqiang said in a Bloomberg interview.
Key quotes
“Exit is a matter of time and it is also necessary.”
“But the timing and method of exit need to be carefully evaluated, mainly based on the status of economic recovery.”
“International economy is recovering in general, and China’s overall situation is better than the international economy.”
“We have done some research recently, and we can see from the trend that our country’s economy is relatively strong, policies are having an effect, and market confidence is recovering,”
“But adjustments of policies shouldn’t be rushed, or weaken the effect of serving the real economy, nor can there be a policy cliff.”
USD/CNY implications
USD/CNY sits at the lowest levels since June 2018 of 6.5918, mainly undermined broad-based US dollar weakness, as markets cheer a Biden win at the US presidential election and diminish the demand for the safe-haven greenback.
Meanwhile, the Chinese economy is faring better than its American and European peers, which remains CNY-supportive.
The cross was last seen trading at 6.5956, still down 0.19% on the day.
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