China is close to unleashing its strongest ever guidance to push back yuan bears via its daily reference rate, as the managed currency defies a string of policy signals in a fall toward a 16-year low.
On Friday, the People’s Bank of China has the choice to issue a so-called fixing with the largest ever premium to the average estimate in a Bloomberg survey that started in 2018. That would be a key signal from the central bank that it wants to nudge the currency higher.
That request came as the yuan fell toward 7.35 per dollar, a level that top leadership has been paying close attention to, the people said. The yuan pared some of the week’s losses and traded around the 7.29 per dollar onshore on Thursday. That makes Friday’s figure especially interesting for China currency watchers to divine whether or not officials really do have a line in the sand for the under-pressure yuan. A gap of more than 950 pips from the average estimate, would be the strongest on record, in data going back to 2018.
China’s currency has tumbled over 5% against the dollar this year amid a disappointing economic recovery and broad dollar strength. PBOC rate cuts to re-ignite growth have just intensified the focus on the widening US-China yield gap and added more pressure to the yuan.
France Dernières Nouvelles, France Actualités
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