CNY Rises Earlier than Anticipated After POBC Intervention

The Chinese yuan rose to its strongest level in almost four weeks on Tuesday – a sign its depreciation trend may be a thing of the past, analysts say.

The yuan strengthened to about 6.22 per dollar after the central fixed the currency’s daily midpoint stronger than market expectations for a third straight day.

“Unexpectedly low fixings is a strong indication that we have seen the peak in USD/CNY,” said Irene Cheung, Asia FX Strategist at ANZ.

The PBOC controls yuan trading by fixing a daily midpoint from which it can rise or fall by 2 percent.

The move marks a departure from earlier this year when the People’s Bank of China (PBOC) engineered sharp yuan depreciation to shake out speculators betting on one-way appreciation.

“We have been of the view that a resumption of renminbi appreciation would occur over the second half of the year. This could now be earlier than we had anticipated,” she added.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza