After taking a hammering in June, China's stocks and currency are off to a rocky start to July.
"Notwithstanding the trade war concerns, the broader picture is the US central bank still remains the most hawkish central bank among its peers and that should support the dollar for now", said Jane Foley, senior currency strategist at Rabobank.
Chinese currency and equity markets have been volatile ahead of July 6, when USA tariffs on $34 billion worth of Chinese goods are set to kick in. It had previously forecast 6.4 yuan per dollar in each year.
The Shanghai index dropped 2.5 percent on Monday and was down more than 1 percent on Tuesday morning. Japan's Nikkei average also recovered from a 0.9 percent fall and was last off 0.1 percent to a near three-month closing low.
On equity markets, Hong Kong dived as much as 3.3 percent at one point to nine-month lows, hit also by a USA move to block China Mobile from offering services to the US market.
"That is why we've seen Chinese yuan and Chinese stocks have suffered selloffs".
Yi's remarks come at a time when the Chinese currency is under considerable pressure: The onshore yuan weakened past 6.7 per dollar in early trading on Tuesday for the first time since Aug 9, 2017.
Thankfully for regional risk, the PBoC engaged the yuan airbrake yesterday afternoon, and at least for the time being, with the help of Chinese state-owned banks that were seen selling dollars to prop up the Chinese currency, is restoring a sense of calm in regional markets.
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Tech shares have been relatively resilient to trade fears - the New York Stock Exchange's index of 10 tech giants including China's Alibaba has gained over 30 percent this year.
The yuan on Tuesday hit its lowest level versus the dollar in almost a year.
The yuan was last traded at 6.6960 per dollar.
China is not using yuan depreciation as a tool in its trade conflict with the US, and will likely step in to avert any disorderly decline, according to Morgan Stanley. Trade tensions with the US have driven market players to interpret the PBOC as having shifted its policy stance, Morgan Stanley said. President Donald Trump also threatened on Monday to "do something" if the United States was not better treated by the World Trade Organisation.
The Reserve Bank of Australia (RBA) kept rates at a record low 1.5 percent on Tuesday and showed no hint of raising them soon. "After all, nothing has been resolved on the Sino-US trade disputes".
"China doesn't need to punish itself for other's foolish trade policies", Li-Gang said, agreeing that a significant devaluation would be "too costly" for China in both the short- and long-run. Oil is one of Canada's major exports.
Equity futures for the U.S. S&P500 and Nasdaq indicated a firmer session after Wall Street ended higher on Tuesday for the third day in a row.
Oil prices climbed after Libya declared force majeure on some of its supplies, with Brent crude rising 0.8 percent to $77.93 per barrel and West Texas Intermediate (WTI) crude was up 1.1 percent to $74.77 a barrel.