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Reserve Data Could Provide Intervention Clue

CHINA

Keep an eye out for FX reserves from China due today (no set time). According to a Bloomberg survey reserves are expected to rise to $3.20bn from $3.178bn, with some of that being attributed to valuation effects.

  • Should the figure exceed the estimate (note top end of range is $3.228bn) it could indicate the PBOC is concerned with/has intervened in the yuan. In December USD/CNY skirted but didn't breach 6.50 even as other USD/Asia crosses hit multi-year lows. The pair has since taken a leg lower on broad based USD weakness and the PBOC has significantly lowered the fix.
  • Even if numbers are below estimates there will be suspicion that the PBOC has enlisted state banks to buy USD, which would not need to be reported.

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