FXStreet (Edinburgh) – Analyst at Deutsche Bank Jim Reid gives his views on the current PBoC stance following last week’s measures.
Key Quotes
“It’s been a quiet overnight session but it feels to us that the full ramifications of last week’s China move will take time to reverberate and might actually be out of China’s hand”.
“For all their talk on Thursday last week about keeping the Yuan ‘basically stable’ and it being ‘groundless’ to talk of a 10% devaluation they have set off a chain of events around the world”.
“They are continuing to try to ease fears with the PBoC‘s chief economist and ex-DB economist Jun Ma yesterday suggesting that China has “no intention or need to participate in a currency war”.
“Well that might depend on how Europe, Japan, the rest of Asia and even the Fed respond to the move”.
“If they ease policy further or in the Fed’s case keep policy looser than it would have been then China’s exchange rate may naturally appreciate again which may encourage further depreciations periodically at their daily fix. So maybe they’ve now lit the touch paper and we’ll see how others react”.
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