Yuan Sinks Toward Limit of Allowed Range, Risking PBOC Pushback
- Yuan is close to weak end of allowed trading band vs. dollar
- PBOC used to support yuan vigorously when it was this weak
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China’s defense of its currency is heading toward a milestone moment that may trigger a more forceful response from authorities to punish short-sellers.
Having weakened the yuan to within a whisker of its fixed range against the dollar on Wednesday, traders are now in danger of being slapped with anything from direct intervention to a dramatic liquidity squeeze in the offshore market. Over the past decade, the People’s Bank of China has stepped in aggressively to stabilize the yuan on each of the five occasions it neared that policy red line.