Editor’s Picks 31 August 2015 at 1:17 GMT

PBoC uses complex tool to tame yuan expectations

China Spectator
China has used an unusual and complex financial derivative instrument to tame growing expectations for the yuan to fall. The PboC intervention caused US dollar-yuan foreign exchange swaps to fall sharply – a movement that implies a stronger Chinese currency and lower market interest rates in the world's second-largest economy in future. The move came after waves of sharp selloffs in the yuan in the offshore market such as in Hong Kong, where the currency trades freely, following Beijing's surprise near 2% yuan devaluation on August 11. The abrupt yuan devaluation was interpreted by investors as a sign that growth is slowing more sharply than Beijing had anticipated.
Read full article at China Spectator
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