China Sets Yuan Fixing Stronger Than Expected in Sign of Defense
Comment of the Day

June 11 2019

Commentary by Eoin Treacy

China Sets Yuan Fixing Stronger Than Expected in Sign of Defense

This article by Tian Chen and Ran Li for Bloomberg may be of interest to subscribers. Here is a section:

"Forget about the psychological 7 level," said Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd., adding that the fixing will stay stronger than 6.9 before the Group of 20 summit. "Today’s fixing sends a clear message that the authorities are still intent on keeping the yuan stable, and
have no desire to see it weaken further."

Trump Says He’ll Raise China Tariffs If Xi Won’t Meet at G-20 U.S. President Donald Trump and his Chinese counterpart Xi Jinping may meet at the G-20 summit in Osaka this month. Traders will be closely watching the gathering to gauge the outlook for trade negotiations and the yuan.

"We expect the Chinese authorities to continue defend 7 in the foreseeable future," said Becky Liu, head of China macro strategy at Standard Chartered Plc, adding that a negative outcome at the G-20 summit wouldn’t warrant a change in this stance. "The PBOC may step up the size and frequency of bill issuance should the yuan come under greater depreciation pressures."

Eoin Treacy's view

With upwards of a million people protesting on the streets of Hong Kong and the world paying attention to the trade war between the USA and China, the Chinese administration has a clear incentive to project an aura of stability and calm.

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