More on China’s state media commentary on tools to deal with ‘panic’ yuan sell off

It’s a mystery to me why the People’s Bank of China would be referring to a panic sell in yuan, and yet here we are:

It’s a surprising remark, intended to calm fears over further rapid selling of the RMB and stabilize the currency. For today CNH has been showing signs of holding around current levels.

A response from Mizuho Bank in Hong Kong agrees:

  • “The state media commentary is intended to shore up investor confidence on yuan exchange rate and the depreciation trend will remain in control given a basket of policy tools to stabilize yuan if necessary,”
  • “The strengthened fix indicates that the PBOC is still in alert mode to defend the currency.”

Still, I wouldn’t have chosen ‘panic’ in my message to the market.

USD/CNH update:

This article was written by Eamonn Sheridan at Source