PBOC Seen Tightening Grip on Yuan Rates Gap as IMF Review Looms
- Offshore yuan rose toward onshore on suspected intervention
- Exchange-rate divergence hampers IMF push, analysts say
This article is for subscribers only.
China shows signs of becoming less tolerant of divergence between its onshore and offshore exchange rates in the run-up to a decision on whether the yuan will be added to the IMF’s basket of reserve currencies.
The gap between the Hong Kong and Shanghai rates widened to about 260 pips during early trading on Friday, before a sharp appreciation of the offshore yuan at about 10 a.m. caused the spread to shrink to less than 100 pips within 20 minutes, data compiled by Bloomberg show. The yuan traded at 6.3693 per dollar in Hong Kong as of 2:47 p.m. local time and it was changing hands at 6.3521 in Shanghai, a spread of 172 pips. The difference exists because China restricts cross-border capital flows.