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The People's Bank of China is preparing for flexible management of the yuan


February, 04 2025
watermark Economic news

China may reconsider its strategy of controlling the yuan exchange rate in the event of a resumption of the US trade war. The People's Bank of China is considering the possibility of switching to more flexible currency management, which may begin immediately after the end of the Chinese New Year holidays. Local markets will reopen on Wednesday, February 5.


The issue of the yuan's exchange rate has been under close surveillance by the Chinese authorities since November, when Trump's victory in the US election led to a weakening of the national currency's position. Since then, the People's Bank of China has been actively working to support it, despite the noticeable strengthening of the dollar, which complicated the task of stabilization.


The current situation leads some analysts to believe that a softening of the yuan exchange rate may be an inevitable step to offset the possible economic consequences of tariff increases. However, this process may be accompanied by an outflow of capital from the country, which adds new challenges to the economy. 


Experts emphasize that the adjustment of the yuan is inevitable, as the currency plays an important role in reducing economic risks. Such a decision is likely to have an impact not only on China, but also on other countries in the region, as a change in the yuan's exchange rate could exacerbate pressure on Asian currencies and cause short-term changes in investment flows.


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