Neutral
PBoC's higher-than-expected daily fix halts USD/CNH's decline; pair rebounds to 6.71.
In the past 24 hours, the People's Bank of China (PBoC) set a higher-than-expected daily reference rate for the Chinese yuan, causing the USD/CNH pair to rebound from a low of 6.7060 to 6.71. This move indicates that Chinese policymakers are more focused on controlling the pace of the yuan's appreciation rather than its direction. The PBoC's intervention suggests a measured approach to currency movements, aiming to prevent rapid fluctuations.
Key points
- USD/CNH briefly fell to 6.7060, its lowest since February 2023, before rebounding to 6.71.
- PBoC set the daily reference rate at 6.7795, higher than market expectations, signaling a controlled pace of yuan appreciation.
- Market estimates were over 700 pips lower than the actual fix, reinforcing the PBoC's intervention strategy.
- OCBC anticipates subdued USD demand and RMB resilience to keep USD/CNH biased lower, with the fixing acting as a speed limiter.
Sources
AI-generated from public news sources. Not financial advice.
