China’s central bank is failing to impress the group that it wants to influence the most with its fixings — the yuan bears.
(Bloomberg) — China’s central bank is failing to impress the group that it wants to influence the most with its fixings — the yuan bears.
Investors are trading the yuan in the spot market at the largest discount since May to the reference rate, a sign that sentiment toward the Chinese currency remains poor despite Beijing’s push to restore confidence. The exchange rate marched almost half way through its allowed trading range on the weak-side of the fixing, meaning the central bank many need to use another strong rate in the next session to rein in the bearishness.
The People’s Bank of China isn’t shy of showcasing its discomfort with the depreciation. It set a stronger-than-expected fix for a 12th straight session on Thursday, after releasing a rate with the strongest bias on record the previous day. Earlier this week, it announced a cut to banks’ foreign-exchange reserve ratio in efforts to support the yuan.
While the PBOC’s measures aren’t shattering traders’ faith in a weak yuan, they did help to slow any panic selling. A gauge of expected swings in the Chinese currency fell for the first time in four days, while the offshore yuan edged away from the psychologically important 7-per-dollar level, after falling as low as 6.9971 on Wednesday.
The onshore yuan was little changed at 6.9650 per dollar as of 1:40 p.m. local time. The fixing, which is released by the PBOC at 9:15 a.m. each day, limits the currency’s moves onshore by 2% on either side.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
