China Macroeconomics & Academia

Christopher Balding

FX & Rates

<p>Yesterday the PBOC announced that it was eliminating the so called “countercyclical factor” and asking banks to adjust their reporting.  We believe there are a number of important points to note.</p><ol><li>As we repeatedly stress, the official PBOC basket is effectively a USD index. The basket is effectively the major currencies the USD trades against many of which are effectively trying to manage themselves against the USD, leading to a CNY that is a USD index.  As we can see in Figure 1, the USDX and the…</li></ol>

Yesterday the PBOC announced that it was eliminating the so called “countercyclical factor” and asking banks to adjust their reporting.  We believe there are a number of important points to note.As we repeatedly stress, the official PBOC basket is effectively a USD index. The basket is effectively the major currencies the USD trades against many of which are effectively trying to manage themselves against the USD, leading to a CNY that is a USD index.  As we can see in Figure 1, the USDX and the…

PBOC Changes RMB "Countercyclical" Factor