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00:00LET ' S GET TO OUR NEXT GUEST. TELL US, IT HAS PROBABLY BEEN A LONG TIME COMING, BUT CERTAINLY THIS IS THE GENIE THE PBOC DOES NOT WANT TO LET OUT OF THE BOTTLE, WHICH IS TO MAKE THE YUAN A ONE-WAY BET, WOULD YOU NOT AGREE? > > DEFINITELY. WE WANT NOT POSTULATE THE PBOC HAS USE THE WEAKNESS IN THE YUAN TO COMPENSATE FOR TRADE TENSIONS. IF YOU LOOK AT THE FOREIGN RESERVE NUMBERS, IT HAS BEEN STABLE FOR CHINA FOR THE LAST FEW MONTHS. WE DON ' T THINK THE PBOC HAS LET THE YUAN DEPRECIATE IN RESPONSE TO THEIR NEGOTIATIONS WITH THE U.S. RISHAAD: YESTERDAY ' S FOREIGN RESERVE NUMBERS ARE INTERESTING IN THAT WE HAVE BEEN INCREASING, WHICH WRAPS SHOWS THE PBOC HAS NOT THEN OUT THERE TRYING TO DEFEND THE CURRENCY. IS IT A SITUATION WHERE THEY LOOK AT THE YUAN WITH A DEGREE OF BENIGN NEGLECT? > > I THINK IF YOU LOOK AT WHAT THEY HAVE DONE OVER THE LAST 3-4 YEARS, THEY HAVE STRESSED WHEN THEY LOOK AT THE VALUE OF THE YUAN, IT IS ALWAYS IN THE CONTEXT OF TRADING PARTNERS. IF YOU MEASURE THE EXTENT OF THIS BASKET OF CURRENCY, THE DEPRECIATION HAS BEEN LESS COMPARED TO THE DOLLAR. THE CONTEXT FOR THE PBOC HAS BEEN WITH RESPECT TO GLOBAL TRADING PARTNERS INSTEAD OF CONCENTRATING ON THE FILE YOU VERSUS THE U.S. DOLLAR. RISHAAD: JUST GETTING THE FIX, THE YUAN REFERENCE RATE AGAINST THE DOLLAR. THE KEEPING A NEUTRAL DECISION IN OPEN MARKET OPERATIONS. SO, DO WE HAVE CURRENTLY A LINE IN THE SAND? IS THIS WHERE THE YUAN STOPS? > > I WOULDN ' T SAY THIS IS WHERE IT STOPS. IF YOU LOOK AT HOW THE YUAN HAS DEPRECIATED, ESSENTIALLY THE DEPRECIATION OF THE YUAN HAS MADE CHINA ' S EXPORTS A LOT MORE COMPETITIVE. IF YOU NEUTRAL OUT WITH THE TARIFFS THE U.S. HAS IMPOSED, THE YUAN DEPRECIATION HAS NEUTRALIZED WITH A QUARTER IMPACT OF WHAT IT WILL BE ON THE CHINESE ECONOMY, SO IN TERMS OF THE COMPETITIVENESS OF THE YUAN,

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PBOC Hasn't Deliberately Let Yuan Depreciate, Says Covenant Capital's CIO

Edward Lim, chief investment officer at Covenant Capital, discusses the yuan by what he thinks the PBOC will do next. He speaks on "Bloomberg Markets: Asia." (Source: Bloomberg)

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