USD/CNY Just Shy Of Upper Daily Trading Limit, Tweak To Macro-Prudential Rules

Spot USD/CNY gapped higher at the open, above 7.3000, and we sit just above 7.3070 currently. To recap, the upside limit on today's spot is 7.3101, so we aren't too far away from that level at the moment. USD/CNH is off earlier post fixing highs, last close to 7.3400 (highs so far at 7.3686). Broader USD sentiment is softer against most majors, which is helping sentiment at the margin, although the yuan is underperforming these moves.

• Just prior to the fixing, the PBoC announced that it would raise the macro-prudential parameter for banks and companies cross-border funding to 1.2500 from the current 1.00 level. Essentially, this step makes it easier for China companies to raise funds offshore, and boost capital inflows.
• This move reverses a shift from January 2021 when the rate was lowered to 1.00 (which was designed to help alleviate CNY appreciation pressures).
• Today's announcement can be seen in the context of further policy adjustments designed to curb depreciation pressures and boost inflows into the local currency. We have seen several adjustments over recent months.