Photographer: SeongJoon Cho/Bloomberg

Dollar's Jump May Reveal China's Line in the Sand for Yuan

China’s bid to rein in appreciation pressure on the yuan will get a helping hand from dollar today, and also provide the market with some valuable intelligence.

How far the People’s Bank of China lets the yuan pull back during this session could indicate to traders the level they’re comfortable with right now. The central bank issues a reference rate for the currency versus the dollar each day and allows it to move 2 percent either side of that rate.

While policy makers have supported the yuan’s turnaround this year, which comes after its worst annual loss in more than two decades, there have been signs in recent weeks that they thought the rally may have gone too far.

Skandinaviska Enskilda Banken’s Sean Yokota discusses the yuan and the drivers of economic growth in China.

(Source: Bloomberg)

— With assistance by Emma O'Brien

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