Loading…
On May 26, the PBOC announced it would add a counter-cyclical adjustment factor to its model for the daily USDCNY midpoint fixing. The aim is to reduce excess yuan volatility and curb one-way bets.
Analysts note this risks reverting toward the pre-August 2015 exchange rate regime.
A less market-determined yuan fix changes the currency backdrop for China-linked feed demand and import costs, though the direct link to feed commodity prices is indirect.
bbvaresearch.comSumedh Deorukhkar, Le XiaMay 30, 2017After 42 past neutral policy events, Chinese Yuan (CNY per USD) moved a median -0.0% over 5 sessions (50% higher; middle half -0.3% to +0.4%), and -0.2% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
The PBOC's counter-cyclical factor added to the USDCNY fixing model lets authorities lean against dollar strength, which supports yuan appreciation (CNY per USD down).
