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No Evidence Of PBOC Intervention


PBOC fixed USD/CNY at 6.5463, 3 pips below sell side estimates. Offshore yuan is weaker, USD/CNH testing yesterday's highs last up 62 pips at 6.5485. The decline for the yuan yesterday was the first this week, and USD/CNH is still someway off this week's highs around 6.58.

  • China's FX reserves fell by US$35bn in March to US$3.17tn, the fall is largely attributed to valuation effect from exchange rate conversion and asset price changes. Overall, there appears to be no evidence the PBOC is intervening to weaken the yuan, however there has been speculation state banks have done the dirty work for the central bank in the past.
  • Tensions between China and other nations continue to simmer, China's ambassador to Australia Cheng Jingye said China would respond in kind to any provocation. "Any people or any country should not have any illusion that China will swallow the bitter pill of interfering or meddling in China's internal affairs and trying to put so-called pressures on China," he said, adding "we will not provoke, but if we are provoked, we will respond in kind." On the home front Australia trade minister Tehan called on businesses to help mend relations with China. There were reports this morning that following a spat with Australia China has turned to US coal to fill void created by Australia import ban.

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