China’s yuan fell after the central bank cut the currency’s fixing by the most since July 2012 and the nation’s exports unexpectedly declined last month.
The People’s Bank of China lowered thedaily reference rate by 0.18 percent to 6.1312 per dollar today, the weakest level since Dec. 3…The cut in the yuan fixing “is significant, coming on the heels of poor trade data, and suggests a possible policy push to weaken the yuan to help exporters,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “This would mean rising risks to more downside.”
Hmmm, who knows, maybe. I do think that the Chinese must be a little concerned about their real exchange rate. Its appreciation has been nothing short of spectacular since the GFC:
If that’s true then the PBOC has just embarked on a major loosening, not the warning to speculators about currency appreciation that I interpreted its moves as last week. Not beyond the realms of possibility given the pressure coming to bear in the economy!
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
