PBOC relaxed about RMB, signals monetary tightening

In his annual outing before the press at the National People’s Congress today, People’s Bank Governor Zhou Xiaochuan made a strong case that policy support for the renminbi can be sustained in the face of market pressure. In fact, he argued that sales of foreign exchange reserves were part of a desirable shift in China’s foreign asset holdings from the central bank to the private sector. He also said that a tighter monetary stance is needed to tackle credit risks.