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‘Today’s Fix Blows Previous Ones Out The Water’: Analysts Question Sustainability Of Yuan Strategy
China is leaning really - really - hard into the counter-cyclical adjustment factor in an apparent b
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What exactly does that last line mean? How likely is it that Beijing actually loses control?
I assume the Chinese government officials implementing this policy are intelligent, and understand there are limits to their ability to stop or slow the currency decline in the long run. So my question is how we should think about these short term moves. Is this evidence that they believe there is some chance of some short term truce or partial solution to the trade dispute? Or is there some domestic policy concern making them pursue drastic short term action? It seems to me that if they believed they were in the middle of a long term dispute with no meaningful resolution in sight for the next few months or more (which is the impression I have), they should just let the currency slide gradually and have no reason to use drastic short term techniques that ultimately will not prevent devaluation. So I’m missing something. Your thoughts?
China can set the fix to ward off FX manipulation charges, but they don’t have to put all that much $ behind it.