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Yu Yongding, a former PBOC monetary policy committee member, wrote that the central bank's new yuan fixing mechanism encourages capital flight and has led to gradual depreciation. He argued the fixing prevents true two-way volatility and has drained foreign exchange reserves.
The new mechanism sets the midpoint based on the prior day's close and a currency basket.
Continued gradual yuan depreciation would keep the dollar-denominated cost of Chinese feed imports elevated. This commentary signals that policy may stay on the same path, which keeps the currency pressure on import demand in place.
fortune.comReuters, Michelle TohNov 22, 2016After 398 past bullish macro events, USDCNY moved a median +0.0% over 5 sessions (56% higher; middle half -0.3% to +0.5%), and +0.0% 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.
