China: Yuan at its strongest level of the year - BBH

Research Team at BBH, notes that the PBOC fixed the yuan at its strongest level of the year against the US dollar (CNY6.4565).

Key Quotes

“Still, it appears to be lagging behind its trade-weighted basket. It seems that when the US dollar is soft, the PBOC tracks the dollar more than the TWI.

Some officials think this protects China in case the US was seeking to devalue the dollar for competitive purposes. On the other hand, when the dollar is strong, the PBOC appears to track the TWI closer than the greenback. This may protect it from claims of competitive depreciation.”