Central bank governor plays down forex fluctuation

China's foreign exchange reserves are fluctuating within a reasonable range, the nation's top foreign exchange regulators said on Friday.

"Capital flows, in most cases, are normal," said Zhou Xiaochuan, governor of the People's Bank of China, at the G20 High Level Seminar on Structural Reform in Shanghai, in response to recent concerns about China's decreasing foreign exchange reserves.

China's foreign exchange reserves dropped to the lowest level since Nov. 2011 at $3.33 trillion by the end of Dec. 2015, $110 billion less than a month ago, according to the central bank.

Zhou said while the proper level of reserves remained to be further discussed, China is able to deploy these reserves and cope with possible challenges. "There are ups and downs in the scale of foreign exchange reserves and they could not spiral up continually," he said. "Currently, there's nothing to worry about."

Li Daokui, an economics professor at Tsinghua University, said in an earlier interview with the Chinese press that foreign reserves this year should not be lower than the bottom line of $3 trillion to stabilize the exchange rate of the renminbi.

"There is no reason to expect sharp depreciation of the yuan," said Zhou, noting that China has a large amount of current account surplus and low inflation rate. "There's no basis for sustained yuan depreciation."

Zhou said that China will continue to implement a prudent monetary policy and it has some policy space and tools to stabilize the economy.