People’s Bank of China keeps a close eye on the yuan and thanks to such tight management the national currency’s rate is easily manipulated. Last quarter, the yuan popped up to its record high as the result of regulator’s policy. In just 3 days, CNY gained 0.7% against USD having leapfrogged its Asian counterparts.
It is quite remarkable that the yuan spent most of the previous month budging and such a break out was unexpected for most analysts. The rise was driven by recent speculations by China’s authorities and outcomes of the Central Economic Work Conference. “The messages from the conference helped to ease concerns over potential market volatility,” said Ken Cheung, Hong Kong-based senior strategist at Mizuho Bank Ltd. “The thin trade at year-end helped to amplify the impact of some buying flows.”
During the conference the focus was shifted from deleveraging to prevention of financial risks. Besides, the officials reiterated that prudent and neutral monetary policy stance is to be applied for 2018 as well.
