Search Results for: yuan

“There are no good options”.

Ok, well the yuan plunged overnight.

I’m not sure it will ultimately be enough to get the job done, all things considered, but the PBoC’s decision to effectively remove a barrier to speculation against the yuan (that’s a crude way to describe it, but it gets the point across) by cutting a reserve requirement put in place in the days following the devaluation in 2015 seems to have succeeded in putting the brakes on the rally – if only for a day.

“The extremely bearish USD sentiment spilled over to the yuan market, and fixing failed to cool down bullish sentiment,” Ken Cheung, a senior currency strategist at Mizuho Bank in Hong Kong notes, adding that “heading to the weekend, risk-off sentiment due to the foundation day of North Korea also raised safe-haven demand for the yuan.”

As we’ve said repeatedly, with Chinese equities riding a hot streak, with capital flight seemingly under control, and with a rapidly appreciating yuan bound to weigh on the economy eventually, don’t be surprised if the PBoC takes the opportunity to push back – at least a little bit. 

Meanwhile, you already know the story with the offshore yuan. And that story hasn’t changed. In fact, the offshore yuan rose against the dollar for a 14th consecutive session on Monday – that’s the longest streak on record.

And to let Jitipol Puksamatanan – a Bangkok-based strategist at Krung Thai Bank – tell it, the only thing that’s going to stop this train is war.

Boy, I’ll tell you what, the yuan has got come serious momentum. 

“…this wouldn’t be the worst time to create some renewed depreciation.”

Ok, so you should note that the onshore yuan strengthened past 6.70 for first time since October on Tuesday. 

The dovish bias apparent in the July Fed statement has the offshore yuan closing in on its strongest level of the year.

“They may be eager to keep the onshore yuan quarter-close to near 6.8 per dollar. The quarter-end rate may be an important indicator for foreign central bank reserve managers to consider adding the yuan as assets.”