China's central bank governor Pan Gongsheng pledged to keep the yuan stable as Middle East tensions trigger global market volatility. Speaking at the National People's Congress, Pan said the People's Bank of China will strengthen guidance for foreign exchange market expectations and shield China's financial markets from external shocks.

Pan cited the US-Israel strike on Iran as a catalyst for risk aversion in international markets, causing large fluctuations in the dollar index and other currencies. He warned that policy uncertainty among major economies could spill over into China, forcing the PBOC to insulate the domestic market from contagion. This marks a shift from earlier moves to slow the yuan's gains.

The PBOC has strengthened the yuan's daily reference rate this week, reversing course from just days earlier. Pan noted that approximately 60% of China's imports and exports are now less susceptible to exchange rate fluctuations thanks to increased corporate use of foreign exchange hedging and yuan-denominated settlements.