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China’s central bank PBOC warns against yuan speculation


The Chinese yuan weakened past the closely-watched 7.2 level against the greenback this week.

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BEIJING — The People’s Bank of China has warned against betting on the yuan, after its rapid decline against the U.S. dollar this week.

“Don’t bet on a one-sided appreciation or deprecation of the renminbi exchange rate,” the central bank said in a Chinese statement on its website late Wednesday, in keeping with a CNBC translation.

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That is based on a readout of a speech by vice governor Liu Guoqiang at a video conference meeting on foreign exchange that day.

The renminbi, or the yuan, crossed the 7.2 level against the greenback Wednesday, falling to its weakest since 2008. The U.S. dollar index, which tracks the dollar against major global currencies, has climbed to two-decade highs because the U.S. Federal Reserve aggressively raised rates of interest this 12 months.

The PBOC’s statement, with its requirement for banks to keep up stability within the foreign exchange market, is “verbal guidance against the recent rapid depreciation of the currency,” Goldman Sachs analyst Maggie Wei and a team said in a note.

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Nevertheless, the yuan’s crossing of the 7.2 mark “suggests Chinese policymakers should not necessarily defending a specific level of the exchange rate,” the report said. The “statement from the PBOC might slow the pace of CNY depreciation on the margin.”

The onshore-traded yuan has weakened against the dollar by 1.9% thus far this week, in keeping with Wind Information.

The Chinese central bank has made other moves to support the yuan this month, including reducing the quantity of foreign currency banks have to hold.

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