13 Aug 2015
PBoC advocates for a stable yuan – Societe Generale
FXStreet (Edinburgh) - Strategist at Societe Generale Kit Juckes has assessed the recent news coming from the Chinese front.
Key Quotes
“The PBOC has successfully killed off the notion that the new currency regime in China will allow the RMB to weaken by 2% on a daily basis”.
“Intervention yesterday and this morning's press conference (with the assurance that the central bank sees no reason for further depreciation and expects a stable currency) have been enough to trigger a small equity market bounce and limit most Asian currencies to narrower ranges”.
“The Korean won saw the biggest bounce as the BOK kept rates on hold. So, after the frenzy in China, market focus will shift elsewhere, although we should not lose sight of the very weak exports and industrial production data that have been released this week”.
“Economic weakness means that China can't afford an endlessly appreciating currency and also makes a further undershoot in global commodity prices - and global commodity exporters' currencies – likely”.
Key Quotes
“The PBOC has successfully killed off the notion that the new currency regime in China will allow the RMB to weaken by 2% on a daily basis”.
“Intervention yesterday and this morning's press conference (with the assurance that the central bank sees no reason for further depreciation and expects a stable currency) have been enough to trigger a small equity market bounce and limit most Asian currencies to narrower ranges”.
“The Korean won saw the biggest bounce as the BOK kept rates on hold. So, after the frenzy in China, market focus will shift elsewhere, although we should not lose sight of the very weak exports and industrial production data that have been released this week”.
“Economic weakness means that China can't afford an endlessly appreciating currency and also makes a further undershoot in global commodity prices - and global commodity exporters' currencies – likely”.