(Bloomberg) -- The People’s Bank of China will improve how it manages exchange rate expectations and guard against any shocks next year, according to a senior bank official.

The PBOC will “step up expectation management on exchange rates and vigorously respond to external shocks,” the head of the monetary policy department Zou Lan told state media in an interview. In addition, the central bank will “resolutely prevent risks of overshooting in the exchange rate.” 

The PBOC’s new “moderately loose” monetary policy has increased its ability to respond to growth challenges, Zou said, days after the bank unveiled the new stance and a day after the government said the monetary authority would look to loosen policy in the near future to support the economy. 

No details were announced on the possible timing of further monetary easing, but the statement also repeated the usual pledge to keep the yuan “basically stable,” likely signaling the central bank will make an effort to slow depreciation of the Chinese currency as it loosens monetary policy.

Pressure on the yuan has intensified since the re-election of Donald Trump, who has threatened to impose tariffs on China and other countries. Some investors have speculated Beijing will abandon its current policy of maintaining a stable currency to compensate for any impact this could have on its economy. 

The yuan has fallen sharply since mid-October and slid Thursday after a media report that the authorities were considering letting it depreciate in response to the threat of a trade war with the US. The onshore yuan lost 0.1% to 7.2795 against the dollar on Friday, with its offshore peer down 0.2%.

The bank will also step up its operations trading Chinese central government bonds, Zou said.

--With assistance from Iris Ouyang.

(Updates with more details from fourth paragraph)

©2024 Bloomberg L.P.