China should establish a fund to intervene in foreign exchange markets, according to Xu Nuojin, deputy governor People’s Bank of China (PBOC), The Wall Street Journal reports. He further added that the country should avoid issuing yuan to buy forex.
The PBOC issues yuan to buy foreign exchange that enters the country to maintain capital controls and the yuan exchange rate. An adviser to the central bank Zhou Qiren also suggested that China should allocate some fiscal resources, such as fiscal revenue, national bonds for foreign exchange interventions.
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