Yuan Gain May Be Capped After PBOC Cuts Shorting Costs
- Previous rule changes saw yuan dip an average 0.5% in 24 hours
- Traders to watch fixing and extent of official intervention
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The yuan came under pressure in early Monday trade, dragging regional counterparts lower with it, after authorities made it easier to bet against the currency’s gains.
The offshore rate dropped as much as 0.7% against the greenback after the People’s Bank of China said financial institutions will no longer need to set aside cash when purchasing foreign exchange for clients through currency forwards, effective Monday. The Australian dollar, a rough proxy for yuan traders that offers better liquidity, declined as much as 0.4%.