PBOC faces new pressure in January – BBG
|Bloomberg carried a story this Friday, underscoring a new problem the Chinese central bank, PBOC, is likely to face next month, after already facing a headache from the recent sell-off in Yuan to more-than eight-year troughs.
Bloomberg reports,” That’s when a $50,000 cap on how much foreign currency individuals are allowed to convert each year resets, potentially aggravating capital outflow pressures that are already on the rise.”
“If just 1 percent of China’s almost 1.4 billion people max out those limits, that’s an outflow of about $700 billion -- more than the estimated $620 billion that Bloomberg Intelligence estimates indicate has already flowed out in the first 10 months of this year.”
Meanwhile, former PBOC monetary policy official, George Wu, noted, "At a moment like this, you have to compare two evils and pick the less-worse one. Capital free flow may have to be abandoned in order to maintain a relatively stable currency rate."
Wu further added, "It may take a while before the situation stabilizes" for the yuan and capital outflows.”
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