Chinese yuan shows resilience amid depreciation against U.S. dollar: central bank deputy chief

The Chinese yuan demonstrated strong resilience in 2024 despite a depreciation against the U.S. dollar, Xuan Changneng, vice governor of the People's Bank of China (PBOC), the country's central bank, said on Tuesday.

Speaking at a press conference in Beijing about the financial sector's role in underpinning the country's high-quality development, Xuan attributed the yuan's resilience to China's stable economic fundamentals and proactive policy measures.

"The PBOC formulates monetary policy primarily based on domestic economic and financial conditions, while also taking into account the balance between internal and external factors. In 2024, amid a volatile and complex international landscape, multiple factors drove fluctuations and strengthening in the U.S. dollar index. China's foreign exchange market showed a remarkable resilience. The yuan exhibited two-way fluctuations in exchange rate and overall stability under the complex circumstances, outperforming many other major currencies. This resilience has created favorable conditions for China to independently implement monetary policies and played a positive role in stabilizing the economy and foreign trade," Xuan said.

The yuan depreciated by 2.8 percent against the U.S. dollar in 2024, closing at 7.2988 by the year-end. However, the yuan exchange rate index, which measures its value against a basket of currencies, or the CFETS, rose by 4.2 percent to 101.47. In the same period, the U.S. dollar index surged by 7 percent, further highlighting the yuan's resilience, according to Xuan.

Looking ahead, Xuan acknowledged challenges in the global economic landscape but expressed confidence in the yuan's stability.

"The external environment may become increasingly complex, severe and uncertain in a foreseeable future period of time. However, China's economic fundamentals remain solid, with a sustained current account surplus, independent and balanced cross-border capital flows, ample foreign exchange reserves, and a resilient foreign exchange market. These factors have injected certainties into and provided strong support for maintaining the yuan's overall stability in exchange rate," he said.

Xuan pointed to policy measures and foreign exchange market maturity as key factors underpinning the yuan's strength.

"China's macroeconomic foundation is more robust. A package of incremental policies introduced last year, particularly after September, are expected to deliver tangible results in succession. The Central Economic Work Conference outlined the implementation of more proactive fiscal measures and moderately accommodative monetary policies for 2025, which will further reinforce the positive momentum of China's economic recovery," he said.

"Foreign exchange reserves remain stable, serving as a cornerstone for maintaining economic and financial stability. The foreign exchange market becomes more resilient, with participants showing greater maturity, more rational trading behaviors, a growing focus on managing exchange rate risks through an increasing number of hedging tools. All these have laid an important microeconomic foundation for the steady operation of the foreign exchange market and the balance between foreign currency supply and demand. Currently, about 30 percent of cross-border trade in goods are settled in the yuan, and 27 percent of enterprises use foreign exchange hedging tools. We can see a pretty good microeconomic foundation for the foreign exchange market from these data," said the central bank deputy chief.

Chinese yuan shows resilience amid depreciation against U.S. dollar: central bank deputy chief

Global observers have welcomed the recent summit between Chinese President Xi Jinping and U.S. President Donald Trump, emphasizing that a stable, healthy relationship between the world's two largest economies is essential for global peace and development.

Xi concluded a three-day state visit to the United States on Friday, where he and Trump reaffirmed their commitment to a constructive, strategically stable relationship guided by fairness, reciprocity, and mutual respect.

Ko Ko, chair of the Myanmar Narrative Think Tank, expressed optimism that the two major powers can work together to foster global development and steer the international community toward a stable, prosperous, and peaceful future.

"The world today faces many destabilizing factors and conflicts. If China and the United States, as two major powers, join hands to promote world peace and development, they can help move the world toward greater stability, prosperity, and peace. The two countries should avoid conflict and pursue cooperation, especially in economic and trade fields, thereby contributing to global development," said Ko Ko.

"President Xi uses 'giant ship' to describe China-U.S. relations. I think it's a very appropriate metaphor as giant ship signifies stability and long-term vision, as well as a journey toward a broader future," said Omar Tahboub, editor-in-chief of Olives Green Times (OGT).

Experts also emphasized that as the world's two largest economies, China and the United States carry a collective responsibility to address pressing global challenges through sustained cooperation.

"In my view, I would argue that this strategic new vision, it's very important in the context of U.S.-China relations. And this is because the vision emphasizes the need for cooperation. In terms of cooperation, given the fact that both countries are the largest economies globally, both countries are the most influential countries globally. It is important for them to cooperate and it's also in the realization of the fact that despite their differences, there are areas of mutual interest," said Dr. Oluwaseun Tella, director of the Future of Diplomacy at the University of Johannesburg's Institute for the Future of Knowledge.

"There's that kind of understanding, it seems between the Chinese leadership and the American leadership that conflict between the two countries ought to be avoided. That there are benefits to cooperation; that there needs to be a positive atmosphere; that there has to be an enhancement of trust and so one can hope that both parties are working assiduously to address those very major issues," said Aurel Braun, professor of International Relations and Political Science of University of Toronto.

"When we talk about China and the US. These are obviously two world powers that do influence a lot of the economic shifts that happen country or worldwide. So, it's important that obviously there is cooperation [and] coordination," said Natalie Kaunda, an economist and development expert in Zambia.

Beyond economic and diplomatic frameworks, former Greek Foreign Minister Georgios Katrougalos emphasized the role of people-to-people exchanges in building lasting bilateral stability.

"I was very much impressed by the idea and proposal of President Xi that 100,000 young Americans would visit China. Exactly because if we want to build stable bilateral relations, there is now stable ground that people know other people, especially young ones," said Katrougalos.

Global observers welcome Xi-Trump summit, calling stable US-China ties essential for world peace