Back in mid June, PBOC announced to de-peg RMB from USD. Since then, RMB did appreciate about 1% by early August but then reverted back near to the prior de-peg level. In summary in the last 2 months, RMB has almost not moved at all against USD.
Does it mean that the so called de-peg is a fake from PBOC? Or is PBOC waiting for a better time to take more aggressive action? My view is that we are likely to see RMB to make bolder move against USD in the next few months.
I have a few observations to support my opinion.
First, Chinese government is sending messages to the public in support of a more flexible exchange rate regime. This message is well reflected from a series of public announcements made by the Deputy Governor of PBOC, Ms Hu Xiaolian. Ms Hu has published five speeches recently to convey the message that Chinese authority has always supported a managed floating exchange rate regime, Read the rest of this entry »