China : PBOC tweaks model guiding Yuan fix to underpin financial stability
Published on Tuesday, May 30, 2017
China : PBOC tweaks model guiding Yuan fix to underpin financial stability
Summary
On May 26th, the People’s Bank of China (PBOC) announced that, henceforth, it would add a ‘counter-cyclical adjustment factor’ to its model guiding daily USDCNY midpoint fixing. The tweak aims to reduce excess Yuan volatility and curb one-way bets by easing ‘herd behavior’, but risks backpedaling Yuan exchange rate regime to the one prior to the reform in August 2015.
Topics
- Topic Tags
- Macroeconomic Analysis
Authors
Sumedh Deorukhkar
BBVA Research - Senior Economist
Le Xia
BBVA Research - Chief Economist