Just hours after the offshore yuan hit a new record low amid chatter of wealthy Chinese capital exodus, and questions about whether the PBOC is ‘allowing’ the communist nation’s currency to devalue, Beijing appeared to step in and spark the biggest rise in the currency on record…
After weeks of fixing the onshore yuan far stronger than the offshore yuan (to no effect), having barely adjusted the fix during the Party Congress, last night saw the fix slightly stronger (for the first time this week) and then offshore yuan leg dramatically higher, almost up to the fix…
Desk chatter suggested Chinese state-owned banks were actively selling dollars – no doubt under orders from party HQ – triggering stop-losses and sparking the biggest single-day gain in the offshore yuan in history…
It’s certainly not the first time we have seen the very visible hand of Beijing in the currency markets, but traders are not piling on to the trade for now…
“The PBOC is experienced in managing onshore-offshore spot basis and spot-fixing gap, by always choosing the right timing,” said Ju Wang, head of Greater China FX & Rates Strategy at BNP Paribas.
The offshore yuan had traded below the lower end of the PBOC’s peg band, likely another reason for Beijing’s sudden entrance…
Finally, not to be left out, Yen is rallying on speculation of yet another round of intervention…
Given our comments last night on the broken JGB market, they may just have to keep intervening.
Idiocy? Yes. But once you are in the endgame of MMT and helicopter money, that’s all you have left.
Tyler Durden
Wed, 10/26/2022 – 08:36
