China to cut treasury holdings to defend yuan

FXStreet (Bali) – China to cut treasury holdings to fend off fall in the yuan, Bloomberg reports, although this is a trend we’ve already seen over the past few weeks, with China having reportedly sold over $106 billion.

China liquidating massive amounts of US paper

The change in China’s currency regime has forced China to intervene in the Yuan to defend its permitted daily trading levels, especially after the FOMC minuted led to a major USD sell-off. In order to do so, a massive liquidation of US paper has been seen. The Yuan remains subject to move within a limited +/-2 daily band.

Still room to maneuver with intervention practices

As SocGen reports: “China’s FX reserves are still 134% of the recommended level, or in other words, around $900bn (1/4 of total) and can be used for currency intervention without severely impacting China’s external position.”

China to cut treasury holdings to fend off fall in the yuan, Bloomberg reports, although this is a trend we’ve already seen over the past few weeks, with China having reportedly sold over $106 billion.

(Market News Provided by FXstreet)