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The People’s Bank of China is draining another 50 billion yuan today and has succeeded in restoring some tightness to interbank markets in the past few days:
The yuan reference rate is set at 6.1556 down slightly from yesterday’s set at 6.1565. And the yuan is sliding again to a new low for the move:
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Just how far will the PBOC push credit tightening and yuan loosening? Michael Pettis argues not too far given a falling currency will rob households of purchasing power, which is the precise opposite of rebalancing. Far enough to piss American speculators and government off, however!
About the author
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.
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