China’s currency continues to attract market attention as it approaches the 6.60 level against the US dollar, with more volatility in the daily fixing rate suggesting greater influence of a trade-weighted basket of currencies. Fundamentals of currency management remain little changed, however, with the PBOC intervening intra-day to limit depreciation, and adjustments in the daily fix appear primarily policy-driven. Continued US dollar strength in global markets will pressure Chinese authorities to further relax control of the yuan.
