Yuan Swings With Equity Markets

PBOC fixed USD/CNY at 6.5338, just 2 pips above sell side estimates, offshore yuan weakened at the start of the session, USD/CNH touching 6.5515 as Chinese equity markets dropped. The yuan reversed its fortunes though, strengthening as equity markets reversed losses on touted intervention from China state funds. Offshore yuan is down some 91 pips, USD/CNH last at 6.5424, but still holding most of the gain from yesterday.

• The yuan has been much more resilient against other currencies, EUR/CNH moved in a range throughout the session yesterday, resisting the gains seen in USD/CNH, and has seen similar price action in Asia so far on Tuesday. EUR/CNH last down 91 pips at 0.7522.
• PBOC) Deputy Governor Chen gave an interview to Yicai and said the central bank doesn't see any need for major stimulus support for China's economic growth for the next five years. He added the PBOC will keep money supply and the growth of total social financing on par with nominal GDP expansion, and that it will not use the yuan's exchange foreign rate as a tool to gain competitive advantage.