CASS: 6.7 a possible level of concern for the PBoC - Bloomberg

Joshua Gibson FXStreet

According to reporting by Bloomberg, Zhang Ming, a senior fellow at the Chinese Academy of Social Sciences (CASS) has highlighted 6.7 as a potential level of concern for the People's Bank of China (PBoC) heading forward.

According to the CASS researcher, 6.7 USD/CNY is the level that could spur some action from the PBoC, either by suspending devaluing operations, or by taking direct actions to dampen volatility.

It's also a possibility for the PBoC to use their ample FX reserves, or to reintroduce a counter-cyclical factor into the way uses its fixing formation mechanism to actively support the Yuan.

Further comments from an MNI report note that the PBoC doesn't want to see markets with one-way expectations, while the central bank is concerned that it could cause further devaluation of the Yuan, and drive even more capital outflows, if the wrong action is taken. Despite that, the PBoC has said it is willing to step in and intervene directly if the Yuan continues to make a sharp decline against the USD.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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