An article in the Wall Street Journal noting the movements in the yuan:

  • China’s yuan hit a four-month low Monday
  • People’s Bank of China (PBOC) guiding it lower
  • “to force out speculators seeking to profit from gains in the currency, and to stem heavy inflows from abroad that flood the country with excess cash and hurt efforts to curb credit”
  • the freely traded offshore yuan fell to the same level as its controlled onshore counterpart

Anayst comments:

  • UBS economist Wang Tao: “The Chinese government appears to want increased flexibility in the yuan’s exchange rate, rather than continued strengthening … The era of steady [yuan] appreciation may be drawing to a close.”
  • J.P. Morgan: “The shift in [yuan] dynamics was mainly driven by several factors: weakening economic outlook, policy shift and technical adjustment by market investors … There were way too many structured products [betting on yuan appreciation] bought by private-bank investors and wealthy individuals… Panic selloff was triggered when the PBOC kept fixing the yuan at weaker levels.”

More at New Bet on China’s Yuan: Down (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline)