Chinese Media Begins Discussing "Shock Moves" By PBOC

Concerns about a rising U.S. Dollar Index and a weak economy have Chinese wondering if a shock move from the PBOC could be on the way. The point here is not to analyze the authors opinion, merely to relay the current hot topics. This article was a top headline on 21st Century Business Herald yesterday.

人民币收盘较中间价贬值1.9959% 事实上已跌停
In this regard, the market gives several possible answers - shock devaluation of the exchange rate + RRR cut + prudent rate cut; foreign exchange market intervention + RRR cuts + interest rate cuts and so on. Among them, opinion on the exchange rate formation mechanism and the future exchange rate movements are the most divisive.

...The author believes that overseas economies continue to add liquidity, the domestic show "deflation" (not yet a "crunch") under the trend of steady economic growth and macroeconomic adjustment of industrial structure will remain ideas. Therefore, relatively reasonable monetary policy portfolio, should be implemented rhythmically RRR and interest rates, and the gradual liberalization of the RMB against the US dollar exchange rate fluctuation limit, as much as possible to allow the market mechanism to adjust the exchange rate "or overvalued," "or undervalued "water.

Specifically, let the yuan against the dollar by 2% intraday volatility gradual integration with non-US currencies, such as the current RMB against the euro, sterling and other volatility limit of 3%, the RMB against the Malaysian ringgit, the Russian ruble's volatility is limited to 5% and so on. At the end of the transition period, the People's Bank may choose to cancel the transaction price fluctuation limit of RMB against the US dollar. At that time, also the RMB exchange rate, domestic spot market and the offshore market forces to balance these three moments.

Bloomberg: Gold Futures Tumble to Six-Week Low on Signs China’s Demand Ebbs
Gold futures fell to a six-week low approaching $1,200 an ounce on speculation that Chinese demand will fall during the Lunar New Year holiday. Silver tumbled, and platinum dropped to the cheapest in more than five years.
Volume in the Shanghai Gold Exchange’s benchmark spot contract dropped to the lowest in a year. Markets in China, the world’s second-biggest buyer, will be closed for five sessions starting Wednesday.
Chinese have ways to buy dollars, but there are limits and restrictions. There are no limits on how much gold Chinese citizens can buy.

Yuan depreciation is not yet a hot search phrase, but deflation is picking up:

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