China Has a Crucial Yuan Call to Make as Dollar Pain Mounts
- PBOC signals focus on pace rather than direction of yuan moves
- No need for officials to step up support unless panic emerges
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With virtually every currency weakening against the dollar, Chinese policy makers have to decide whether it’s worth their while resisting the decline of the tightly managed yuan.
China’s currency is rapidly approaching levels that prompted authorities to end episodes of depreciation in 2020 and 2019, when the yuan neared 7.2 per dollar, or about 4% weaker than its current level. Strategists say it’s only a matter of time before the yuan dips past 7, a key line of defense for China’s central bank in recent years with the exception of brief disruptions since Donald Trump’s trade war against Beijing.