A bit more on that earlier report from Financial News in China:
The People’s Bank of China (PBOC) is set to issue a record volume of offshore yuan bills in Hong Kong this month, aiming to stabilize the yuan’s exchange rate amid growing pressures. Issuing offshore yuan bills is a strategy for absorbing excess liquidity in the offshore market, reducing downward pressure on the currency.
This move follows what is described as “robust overseas demand” for yuan bonds and comes as the currency (onshore) has weakened to 7.32 per US dollar, its lowest level since 2007.
The issuance, significantly larger than previous rounds, highlights the PBOC’s commitment to supporting the yuan and curbing further depreciation.
The central bank is also leveraging its daily reference rate tool alongside offshore bill issuance to stabilize the yuan. The daily fixing, set below 7.20 today (vs. many expecting higher than this level), demonstrates the PBOC’s intent to slow depreciation while ensuring that onshore yuan fluctuations remain limited.
The planned issuance of offshore yuan bills, coupled with the PBOC’s broader interventions, underscores its resolve to maintain the yuan within a reasonable and balanced range despite global economic uncertainties. The PBOC’s multi-pronged strategy reinforces confidence in its ability to manage exchange rate fluctuations and stabilize the yuan.
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Offshore yuan update:
This article was written by Eamonn Sheridan at www.forexlive.com. Source