{"id":1406861,"date":"2023-08-17T18:05:00","date_gmt":"2023-08-17T22:05:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1406861"},"modified":"2023-08-17T18:05:00","modified_gmt":"2023-08-17T22:05:00","slug":"beijing-bullies-banks-into-buying-routed-renminbi","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/beijing-bullies-banks-into-buying-routed-renminbi\/1406861\/","title":{"rendered":"Beijing Bullies Banks Into Buying Routed Renminbi"},"content":{"rendered":"

Beijing Bullies Banks Into Buying Routed Renminbi<\/span><\/p>\n

\n

A day after Beijing pressured investment funds ‘not to sell’ stocks<\/a>, Bloomberg reports that, according to people familiar with the matter, Chinese authorities told state-owned banks to step up intervention in the currency market this week, in a push to prevent a surge in yuan volatility<\/strong>.<\/p>\n

And sure enough, after 5 straight days lower, China’s offshore yuan rallied overnight…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Despite lots of ‘carrots’ this week –\u00a0 a surprise interest-rate cut, a string of stronger-than-expected daily reference rates for the yuan, and large injections of short-term cash to the financial system – Chinese authorities had failed to inspire confidence<\/strong>…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

As a reminder, the so-called fixing limits the onshore yuan\u2019s moves by 2% on either side each day<\/strong> (and th elast three days have seen the offshore yuan test the lower bounds)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

And so they broke out the old ‘stick’ as authorities were also checking whether domestic companies helped accelerate yuan declines by conducting speculative trades against it<\/strong>.<\/p>\n

\u201cWhile the authorities are trying to guide a stronger yuan fix, market forces still dictates,\u201d said\u00a0Janet Mui, head of market analysis at RBC Brewin Dolphin. <\/em><\/p>\n

\u201cIt seems PBOC is okay for a gradual yuan depreciation. They will fight big and sharp moves though.\u201d<\/em><\/strong><\/p>\n

In its recent monetary policy report, the PBOC warned that China will resolutely prevent excessive adjustment in the yuan.<\/p>\n

Chinese policymakers have the right tools, the experience and confidence to maintain \u201corderly functioning of the foreign-exchange market,\u201d<\/strong><\/em> the central bank said.<\/p>\n

Notably the tap on the shoulder came as the offshore yuan traded around 7.35 – a well-watched level historically.<\/p>\n

The yuan \u201cshould be weak enough to support the export industry, but not dramatically weakening as this would increase pressure of capital that wants to leave to country,\u201d <\/strong>said\u00a0Ulrich Leuchtmann, head of currency strategy at Commerzbank AG. <\/em><\/p>\n

The last time the Renminbi was here (around 7.30), Beijing also aggressively fixed the yuan higher, also trying to support the currency…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Finally, Bloomberg reports the same sources claiming that senior officials are also considering the use of tools such as cutting banks\u2019 foreign-exchange reserve requirements to prevent a rapid depreciation in the currency<\/strong>.<\/p>\n

In other words, open-mouth operations <\/strong>first before being forced into actual market moves.<\/p>\n

Finally, we see a decoupling between USTs and yuan today…<\/p>\n

<\/a><\/p>\n

Some have suggested Treasuries are a natural ‘source of funds’ for the intervention in Chinese FX markets (sell the bond, receive USDs, sell the dollars against yuan).<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 08\/17\/2023 – 14:05<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/beijing-bullies-banks-buying-routed-renminbi<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Beijing Bullies Banks Into Buying Routed Renminbi A day after Beijing pressured investment funds ‘not to sell’ stocks, Bloomberg reports that, according to people familiar…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1406861","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-5TZj","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1406861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1406861"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1406861\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1406861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1406861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1406861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}