PBOC likely to lean into a “weakening yuan bias”
BBVA chief Asia economist Le Xia on the People's Bank of China and the yuan:
- PBOC may be gauging market sentiment on yuan by weakening the currency
(its been weakened by the central bank today and for the previous two days)
- By doing so the bank might be looking at capital outflow pressures
- Especially given the potential for the Fed to rasie rates in H2 (in impact on the USD - i.e. higher)
- Says signs the economic recovery in China is faltering, so PBOC is likely to lean into a "weakening yuan bias" to dollar and the basket
His comments come via Bloomberg .
Hopefully you've seen some of recoent posts on the yuan vs. the PBOC basket ... despite some jumps in the value of the yuan against the USD there has been a consistent weakening of it agsainst the basket. That's the main game.