BEIJING: China’s devaluation of its yuan should not be made a scapegoat for the recent global stock market rout, a senior Chin­ese central bank official told Reuters on Thursday.

Instead, Yao Yudong, head of the bank’s Rese­arch Institute of Finance and Banking, said concerns over a possible US interest rate rise this year may have fuelled capital flight out of emerging markets.

He said the US Federal Reserve should delay any rate hike to give fragile emerging market economies time to prepare.

“China’s exchange rate reform had nothing to do with the global stock market volatility, it was mainly due to the upcoming US Federal Reserve monetary policy move,” Yao said.

“We were wronged.” Yao’s comments, which came on the same day that state media issued a number of commentaries defen­­ding China’s policy making, show Beijing’s sensitivity to suggestions it may have fumbled economic policy.

The ruling Communist Party has drawn much of its legitimacy in past decades from fostering economic growth and raising incomes, and wants to be seen as a responsible player in the global economy.

Yao said China’s economy remains on a sound footing, though some emer­ging market economies face a possible financial crisis in the years ahead stem­ming from liquidity stresses if the US raises interest rates.

“So we hope the Federal Reserve could further delay its interest rate rise, giving emerging markets ample time to prepare. The Fed should not only consider the US economy, but should also consider the global economy which is very fragile,” he said in an exclusive interview.

Published in Dawn, August 28th, 2015

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