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Outflows Resurgent

Preliminary balance of payments data in Q3 highlight a key factor behind the PBOC’s reluctance to cut interest rates: capital outflows have picked up as the currency has weakened, despite Chinese bond yields rising versus US yields. News about trade negotiations is contributing to short-term currency movement, but the longer-term direction will be set by China’s capital flows and the PBOC’s monetary policy stance.

Posted November 21, 2019
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