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PBoC Leaning Against CNY Strength?


Not as low a USD/CNY mid-point fixing as expected from the PBoC (CNY6.3014). The mid-point fixed above the CNY6.3000 mark even with broader sell side expectations looking for a sub-CNY6.3000 fix (BBG median of CNY6.2955). This comes after a RTRS sources report noted that state-owned Chinese banks were buying USD vs. CNY on Monday, in what seemed to be an attempt to stop a break below the CNY6.3100 level (USD/CNY closed Monday trade at CNY6.3092, troughing at CNY6.3065, while USD/CNH traded as low as CNH6.3072 on Monday). For reference the deviation between the USD/CNY mid-point fixing wasn't large by historical standards, although it seems like the authorities are leaning against the wind (at least at the margin) when it comes to yuan strength.

Fig. 1: Differential Between USD/CNY Mid-Point Fixing & BBG Median Estimate (Pips)

Source: MNI - Market News/Bloomberg

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