China has great confidence in stabilizing the exchange rate and will support the development of the real economy through cutting the reserve requirement ratio (RRR), said Zhu Hexin, vice governor at the People's Bank of China, China's central bank, on Tuesday.
Pedestrians walk past the People's Bank of China headquarters in Beijing, China, on January 7. (Photo: VCG)
"We will support the development of the real economy effectively, through the RRR cut. As long as China's real economy develops well and Chinese companies can earn profits, our exchange rate will be more stable, so China can then promote a sustainable economic development," Zhu said, noting that the RRR cut doesn't contradict stabilizing the exchange rate.
He added China adopts a floating exchange rate regime, which reflects the relationship of market supply and demand.
"The solid foundation of our economy and sufficient foreign exchange reserves strengthen our confidence in the exchange rate," Zhu noted.
China's first RRR cut in 2019 was implemented on Tuesday, which will free up $750 billion capital. This cut was the fifth RRR cut in China since 2018.
