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Rampant Dollar Threatens to Break China’s Tight Grip on the Yuan

  • PBOC has tools to defend currency but is largely on sidelines
  • Few good options in strong dollar world: China Beige Book

As the list of central banks intervening to protect their currencies against the surging dollar gets ever longer, one country is notable by its absence: China. 

While the People’s Bank of China has plenty of tools it can use to defend its currency, it’s largely sitting on the sidelines despite the yuan’s decline to its weakest levels since the early days of the pandemic. The currency hasn’t been this close to the weak end of the fixing band since 2015.