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China central bank says confident of keeping yuan stable

FILE PHOTO: A U.S. dollar banknote featuring American founding father Benjamin Franklin and China's yuan banknote featuring late Chinese chairman Mao Zedong are seen among U.S. and Chinese flags in this illustration picture taken May 20, 2019. REUTERS/Jason Lee/Illustration/File Photo

SHANGHAI (Reuters) - China’s central bank is confident and capable of keeping the yuan basically stable at reasonable and balanced levels after it weakened past the key 7 per dollar level on Monday morning.

The level was last breached during the global financial crisis in 2008.

The People’s Bank of China (PBOC) said in a statement on its website that the losses in the yuan were largely due to trade protectionism and tariffs on Chinese goods.

It added that exchange rate movement is dependent on fundamentals over the long term, while short-term market supply and changes in the U.S. dollar also have a huge impact on the yuan in the near term.

The central bank added that China’s FX policy stance will not change after the yuan weakened past the key level. But it will take necessary and targeted measures to resolutely fight against short-term speculation to ensure stable operation and stable expectations in the FX market.

The onshore spot yuan traded at 7.0299 per dollar as of 0300 GMT.

Reporting by the Beijing Monitoring Desk, Winni Zhou and Andrew Galbraith; Editing by Jacqueline Wong