04/01/17

Offshore Yuan Soars Most In One Year On Fears Of Capital Controls [feedly]



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Offshore Yuan Soars Most In One Year On Fears Of Capital Controls
// Zero Hedge

Following last night's trial ballon by the PBOC, when as reported overnight the PBOC was studying possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans, the Offshore Yuan has reacted accordingly, and soared by 0.9% to as high as 6.8950 per dollar as of 7:20pm in Hong Kong. That was the biggest increase on a closing basis since Jan. 11 last year.

Meanwhile, the onshore yuan up 0.3%, most since July. As shown in the chart below, the spread between the twois now the most negative since the start of 2016.

"China has been challenged by capital outflows and declining foreign-exchange reserves, and policy makers are taking measures to solve the problem," said Eddie Cheung, a Hong Kong-based foreign-exchange strategist at Standard Chartered Plc, the most accurate forecaster for Asian emerging-market currencies according to a Bloomberg ranking. "Funds will continue to exit in the first half due to individuals' purchases of the dollar and on concerns of U.S. political uncertainty."

As further reported, in a ...

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