Tag Archives: renminbi depreciation

China’s policy stimulus could continue to weigh on the renminbi in the near term, but fading support for the dollar and PBoC may limit downside risks for the Chinese currency.Since mid-June, the renminbi has come under severe downward pressure. The China Foreign Exchange Trade System (CFETS) renminbi index has lost roughly 4.7%, while the renminbi has dropped roughly 5.8% against the US dollar. As we are moving nearer to the psychological threshold of CNY7.00 per USD, concerns that the...

A new daily fixing mechanism gives the Chinese central bank more control over the exchange rate and reduces pressure on the renminbi in the case of renewed dollar strength.The People’s Bank of China (PBoC) recently announced the introduction of a “counter cyclical adjustment factor” (CCAF) to calculate the daily USD/CNY reference rate (the “fixing rate”). The previous formula used two factors: the USD/CNY spot close of the previous day and an adjustment factor taking into account overnight...