PBOC Tries and Fails to Lower Rates as Intervention Drains Yuan
ByChina’s central bank pumped the most funds into financial markets in six months to ensure its intervention to prop up the exchange rate won’t starve the economy of yuan — and still interest rates climbed.
The overnight repurchase rate rose 24 basis points since Aug. 11, when authorities devalued the yuan, to a four-month high on Friday, even as the People’s Bank of China injected a net 150 billion yuan ($23 billion) this week using reverse-repurchase agreements. The central bank also added 110 billion yuan via its Medium-term Lending Facility on Wednesday.
China’s currency has been relatively stable this week, after sliding 3 percent in the three days following the devaluation. JPMorgan Chase & Co. says the PBOC will need to sell the greenback and buy yuan if it wants to re-anchor currency traders’ expectations. Foreign-exchange reserves have already slumped $315 billion in the year through July to $3.65 trillion and Bloomberg Intelligence estimates that every 1 percent drop in the yuan triggers about $40 billion of outflows…
PBOC Tries and Fails to Lower Rates as Intervention Drains Yuan
