Assessing China’s FX reserve adequacy – BNPP

FXStreet (Delhi) – Research Team at BNP Paribas, suggests that China’s reserve adequacy saw a sharp deterioration in 2015 and the trajectory is likely to remain downwards under the current rigid exchange rate framework.

Key Quotes

“The writing is on the wall. China’s mighty stockpile looks less impressive when assessed against external liabilities and potential domestic capital flight. A similar story has played out in other emerging markets, culminating in large, unplanned currency devaluation. 2016 looks to be a year when the extent of Chinese exceptionalism will be severely tested.”

Research Team at BNP Paribas, suggests that China’s reserve adequacy saw a sharp deterioration in 2015 and the trajectory is likely to remain downwards under the current rigid exchange rate framework.

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