China’s Central Bank Resorts to ‘Dirty Peg’, BNP Paribas Says
ByLess than two weeks after pledging to allow a freer exchange rate, the People’s Bank of China has tightened its grip on the yuan, according to BNP Paribas SA.
The onshore yuan has traded within 0.3 percent of 6.4 a dollar from Aug. 14, a level that BNP Paribas Chief Economist for Asia Richard Iley calls a de facto “dirty” peg. China devalued its currency last week and introduced a more market-determined method of setting the daily fixing, which the yuan can move as much as 2 percent either side of.
“With depreciation expectations in danger of turning extrapolative, the PBOC appears to be intervening heavily,” Iley wrote in a research note Friday. “The role of the market, rather than being enhanced, is actually reduced for now.”…
China’s Central Bank Resorts to ‘Dirty Peg’, BNP Paribas Says
