Central bank to enhance market guidance to keep yuan stable

China will strengthen guidance on market expectations and guard against the risk of exchange rate overshooting to keep the yuan broadly stable, the country's central bank said, according to a report by Financial News, a newspaper backed by the People's Bank of China.

A senior official from the central bank's monetary policy department said China's macroeconomic fundamentals remain sound, with the country's balance of payments expected to stay broadly balanced on its own, providing a solid foundation for medium and long-term currency stability.

Multiple factors affect exchange rate movements, according to the official, and the PBOC will continue to let the market play a decisive role in the formation of the yuan's exchange rate and maintain its flexibility.

The central bank will "strengthen expectation management and guard against the risk of exchange rate overshooting" to keep the yuan's value generally stable at a reasonable and balanced level, the report said.