Beijing Cautious on Yuan Gains Amid Dollar Weakness
The recent US dollar weakness has led to analysts expecting the Chinese yuan to strengthen. However, despite this opportunity for appreciation, the People's Bank of China (PBOC) has shown caution and resisted market pressure.
A note issued by Gavekal Dragonomics on Wednesday compared the response of the PBOC to recent US Treasury interventions. The US dollar index declined by more than 2% since late July, but the yuan only gained less than 1% against the dollar.
He Wei, a China economist at Beijing-based research firm Gavekal Dragonomics, stated that 'the response of the People's Bank of China (PBOC) to these unusual interventions from the US has been telling.'
The PBOC set the yuan's midpoint at 6.7840 per US dollar on Thursday, slightly weaker than the day before. This was also weaker than the offshore yuan, which traded at 6.721 per US dollar.