China Macroeconomics & Academia

Christopher Balding

FX & Rates

<p>On Friday last week, the PBOC ended the 20% reserve requirements for CNY forward trading.  We said at the time that while mechanically, it would have minimal impact on the direction of the RMB, it was a clear signal that the PBOC at least wanted the RMB to flatten and we would expect lower the RMB. What we did not expect is that it would be quite so abrupt.</p><p>As we can see in Figures 1 and 2, the CNY was on a clear and rapid decline. After the announcement, the &lt;&lt;RMB against the USD reversed…</p>

On Friday last week, the PBOC ended the 20% reserve requirements for CNY forward trading.  We said at the time that while mechanically, it would have minimal impact on the direction of the RMB, it was a clear signal that the PBOC at least wanted the RMB to flatten and we would expect lower the RMB. What we did not expect is that it would be quite so abrupt.As we can see in Figures 1 and 2, the CNY was on a clear and rapid decline. After the announcement, the &lt;&lt;RMB against the USD reversed…

CNY

What's Behind the RMB Weakening?