China central banker clarifies policies on yuan, Internet finance

The latest round of yuan volatility in the market is normal and authorities will respond to questions on the issue at a press conference in coming days, Zhou Xiaochuan, China's central bank governor said Tuesday. Zhou's comments came as the recent fall in the yuan's value has prompted heated debate about its causes, with some speculating the slide may be engineered by authorities. Having rising steadily for months, the value of the Chinese currency Renminbi, or the yuan, has fallen against the U.S. dollar for several consecutive trading days since Feb. 18. Without giving other details other than repeating the official tone, Zhou said authorities will offer clarifications in a coming press conference. Asked whether China would widen yuan's trading band, Zhou smiled, "We will make public the policy when there is a change." In China's foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day, and analysts largely expect government to gradually expand the floating range. Zhou also responded to recent speculations regarding regulation on China's burgeoning Internet finance, led by e-commerce giant Alibaba's wealth management product Yu'e Bao. Zhou said authorities will definitely not crack down on the innovative products, but will improve regulations in the area. Allowing its users to channel spare money to money market funds with high returns and almost zero threshold, Yu'E Bao has so far attracted 81 million users, with aggregate deposits estimated at around 500 billion yuan (81 billion U.S. dollars). Many netizens and entrepreneurs supported it, hailing it a good innovation, a relief for individual savers and micro businesses and a whip on China's interest rate reform, but financial experts, on the other hand, cautioned against risks.