China propping up yuan amid market anxiety
Daily currency fixing helping to prevent panic from spreading to currency market
As the Chinese stock and bond markets edge down amid the government’s crackdown on financial risk, the central bank is using its secret weapon to guard against a major shock, reports Bloomberg. The People’s Bank of China has been using its daily currency fixing moves to prop up the Yuan against the dollar.
According to Bloomberg calculations, the exchange rate has come in stronger than median forecasts from ANZ, Mizuho Bank, Scotiabank and China Guangfa Bank every trading day since April 5.
“The PBOC is using the stronger fixings to prevent panic sentiment from spreading to the currency market,” chief economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong, Xia Le explained. “In the short term, no one can fight against the PBOC when it intervenes through the fixings. Investors will likely become more willing to sell the dollar, pushing the yuan higher from current levels.”