PBoC lifts the yuan

22 November, 2016

PBoC wa consequently moving the yuan fixing lower in the last 13 days. While this was not sending markets into a risk-off spin it was seen as a sign of pressure caused by capital outflows. But today the yuan was set at a stronger level. The central bank did not wait until the 7.00 level is breached, which raises speculation that the authorities are now ready to step up efforts to stabilize the currency, or at least to slow its descent vs. USD.

USDCNY was set lower today in the Chinese central bank fixing; source: Bloomberg

There has even been a note from BNPP saying that with PBoC countering depreciation pressures more forcefully investors should consider trimming their bets on the yuan’s further loss of value

Due to the previous depreciation CNY went to the lowest level since mid-2008. Counting since the US elections the Chinese currency lost 1.5%

Such PBoC behavior has likely contributed to the overall positive sentiment on the markets today. 


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