China has studied possible scenarios for the yuan and capital outflows this year and is preparing contingency plans, according to people familiar with the matter. The offshore yuan surged the most in a year.
The authorities have used stress tests, models and field research, said the people who asked not to be identified as the studies haven’t been made public yet. Financial regulators have already encouraged some state-owned enterprises to sell foreign currency and may order them to temporarily convert some holdings into yuan under the current account if necessary, they added. The State Administration of Foreign Exchange didn’t immediately reply to a fax seeking comment.
