A little more on the previous report from Financial News in China:
The People's Bank of China (PBOC) is expected to issue a record number of offshore yuan bills in Hong Kong this month, aiming to stabilize the yuan's exchange rate amid pressures 'increasingly. Issuing yuan bills offshore is a strategy to absorb excess liquidity in the offshore market, reducing downward pressure on the currency.
The move follows what is described as “strong overseas demand” for yuan bonds and comes as the (onshore) currency has weakened to 7.32 per US dollar, its lowest level since 2007.
The release, significantly larger than previous rounds, reflects the PBOC's commitment to supporting the yuan and reducing further devaluation.
The central bank is also leveraging its daily reference rate tool along with offshore bill issuance to stabilize the yuan. The daily position, set below 7.20 today (vs. many expect higher than this level), indicating the PBOC's intention to depreciate while ensuring that onshore yuan fluctuations remain limited.
The planned issuance of offshore yuan bills, along with the PBOC's wider interventions, reinforces its intention to keep the yuan within a reasonable and balanced range despite global economic uncertainty. The PBOC's multilateral strategy reinforces confidence in its ability to manage exchange rate fluctuations and stabilize the yuan.
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Offshore yuan update:
