If you’ve been following along over the past two months, you know China is engaged in an ongoing struggle to combat downward pressure on the yuan.
The PBoC engineered a hilarious short squeeze in late May/ early June in an effort to reverse a trend that saw the onshore spot consistently closing at a discount to the fix.
They introduced what they’re euphemistically calling a “counter-cyclical adjustment factor” that essentially amounts to a rolling back of the yuan liberalization push and when that failed to do the trick, they started stepping back into the spot market, selling dollars.
We’ve documented this effort extensively and for those interested you can review the history here:
- ‘No Matter How Hard They Try’: China Has A Problem
- Meanwhile, In China: “Relentless, All-Round” FX Shenanigans
Well if you’re looking for evidence of shenanigans, there’s no better time to check the charts than 4:00 p.m. local time because what they like to do is sell dollars into the 4:30 p.m. timestamp the PBoC uses to set the next day’s fix.
Sure enough… check this chart out from Tuesday:
“The onshore yuan erased the day’s decline to strengthen 0.06% to 6.7986 per dollar as of 4:01 p.m. in Shanghai,” Bloomberg wrote around 10 minutes after that rather blatant move.