The PBOC has (gently) tapped on the brakes of yuan appreciation

Noting some subtle nudges from the People’s Bank of China in recent days and weeks which are indicative of their desire to slow the rate of gain for the Chinese currency but slowing capital inflows:

  • yesterday¬†the POBC lowered its macro-prudential adjustment factor for companies cross-border financing – essentially reducing the capacity of domestic companies to borrow overseas (by 20%)
  • has curbed financial institution USD borrowing
  • raised the cap for local companies to lend to affiliates abroad
Looking ahead the banks has a few other tools in the box, eg:
  • increasing the QDII quota for overseas investments
  • procedural restrictions on the annual $50,000 quota for residents to buy foreign currencies could be relaxed
 Noting some subtle nudges from the People's Bank of China in recent days and weeks which are indicative of their desire to slow the rate of gain for the Chinese currency but slowing capital inflows: