PBoC flexibility compromised by value of Yuan

By FXStreet FXStreet (Guatemala) – The start of the year has been all about China (and oil). Many have been expecting subsequent action from the PBoC, albeit we have already seen record levels of liquidity, (about USD243 billion just last week) and China’s Vice President last week publicly announced that the government is going to “look after” the majority of stock investors. At the same time a main concerns is the value of the Yuan.

From the weekend news, the Wall street Journal offered an article on the minutes of the PBoC where they had expressed concerns over the yuan before next month’s Lunar New Year holiday. The worry here is that should the Central Bank ease further with another RRR cut, the yuan could come under further pressure. However, the PBoC may not be able to put of a cut for much longer because of the pace of which money is already leaving China at the same time that the bank is needing to pump funds into the Yuan to prop it up and that is leaving the liquidity and flexibility of the bank compromised.
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Source:: FX Street