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Daily Kickstart (Currency Chaos Edition)

The pound gets pounded while the RMB remains volatile. The offshore yuan posted its largest two-day decline since last summer.

Another day, another batshit crazy session in RMB world. The offshore yuan suffered its biggest two-day decline since last June, while the onshore spot was relatively stable after the PBoC weakened the daily fix by the most since June 27. Policy banks were sellers of USDCNY at 6.9340, one trader told Bloomberg. Offshore liquidity conditions improved a bit as the CNH fell, with O/N CNH HIBOR falling to 14%. "[The] yuan has limited leeway to advance further in face of renewed dollar strength", Bocom International analyst Karen Tan said in note, adding that "CNH tends to fall shortly after overnight Hibor rate soars, historical data shows." The CNHCNY basis narrowed markedly. In money markets the closely watched 7-day repo rate dropped 4 bps to 2.29%. The central bank pulled net 595 billion in liquidity last week. Around 110 billion was injected today while only 40 billion in repos matured, resulting in net addition of 70 billion. Here's a bullet point summary of comments made by PBoC adviser Fan Gang in an interview with Bloomberg TV: Policy makers won’t likely stop intervention: Fan China doesn’t intervene much with forex reserves: Fan Decline in forex reserves
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