Arbitrary Lines in Shifting Sand

China’s apparent intervention tightening liquidity within the offshore CNH market has introduced new uncertainty into future policy guidance of the yuan exchange rate. The level of 6.70 to the US dollar has been defended for over two months, breaking from the central bank’s previous pattern of guiding a gradual trade-weighted depreciation, while capital outflows have accelerated during this period and onshore liquidity conditions have also tightened.

Posted August 1, 2017
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