I struggle to see how the Yuan can appreciate against the USD for roughly 40 out of the last 50ish sessions without the chinese government active participation given their monetary policy.
The central parity rate has fallen with the broad USD sell-off, this is the managed part that is under their influence because they set the rules. However the actual rate is quite a bit lower than the central parity rate.
Yes, but it can just mean they're trying to slow down the appreciation, not actively trying to push the Yuan lower?
Also how do you square that with the talk of a slowing economy and the lingering debts from the real estate collapse? The economy is not perfectly fine as you point out, but it must be doing relatively well for their currency to appreciate.
Finally; if the Yuan reprices 15% higher (let alone 30%) then it means the chinese economy is much bigger than commonly discussed.
It wasn't that long ago that it was a fixed currency. The level of the currency is totally divorced from any representation of its economy because it has never been allowed to float.
IF it was allowed to float, it would adjust so that China's trade surplus moderated to its true competitive advantage. But of course if they allowed this, capital controls would have to be abandoned which would cause endless other problems.
They are actively pushing against the currency, we know this. The FT acknowledged it today, but it was clear in the data over the last few months.
I struggle to see how the Yuan can appreciate against the USD for roughly 40 out of the last 50ish sessions without the chinese government active participation given their monetary policy.
The central parity rate has fallen with the broad USD sell-off, this is the managed part that is under their influence because they set the rules. However the actual rate is quite a bit lower than the central parity rate.
Yes, but it can just mean they're trying to slow down the appreciation, not actively trying to push the Yuan lower?
Also how do you square that with the talk of a slowing economy and the lingering debts from the real estate collapse? The economy is not perfectly fine as you point out, but it must be doing relatively well for their currency to appreciate.
Finally; if the Yuan reprices 15% higher (let alone 30%) then it means the chinese economy is much bigger than commonly discussed.
It wasn't that long ago that it was a fixed currency. The level of the currency is totally divorced from any representation of its economy because it has never been allowed to float.
IF it was allowed to float, it would adjust so that China's trade surplus moderated to its true competitive advantage. But of course if they allowed this, capital controls would have to be abandoned which would cause endless other problems.
They are actively pushing against the currency, we know this. The FT acknowledged it today, but it was clear in the data over the last few months.