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Equity Markets Gain But FX Mixed

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The PBOC can enhance the public's confidence in its currency policies by awarding those who follow its guidance on the yuan and punish those who bet against it, Guan Tao, the chief economist of BOC International and a former forex regulatory official, wrote on Yicai.com. While the PBOC's previous response to excess depreciation may not fit, the same principle should be observed, Guan said without elaborating. Authorities must develop emergency response measures if an overall weakening dollar causes the yuan to move one way, Guan said. Two-way movement is likely to be observed in a better scenario, he said. No government will stand by and do nothing if the markets exhibit volatilities contrary to its wishes, Guan said citing the Federal Reserve's extraordinary easing approach.