Ignore the Yuan at Your Peril

Bloomberg: China Warns Yuan Speculators They Will Lose Money in Long Term

“Do not bet on one-way appreciation or depreciation of the yuan, as losses will definitely be incurred in the long term,” the People’s Bank of China said in the statement released Wednesday. Key market participants need to “voluntarily safeguard the stability of the market, and be firm when they need to iron out big rallies or declines in the exchange rate.”

The central bank added that it has “plenty of experience” to fend off external shocks and effectively guide market expectations. The statement referred to corporates making speculative bets on the exchange rates and financial institutions that were violating policies.

They're bluffing. They don't have enough dollars to defend the yuan and moreover, they don't want to defend the yuan if the dollar continues rising.

The onshore yuan has fallen more than 4% against the dollar this month and is on track for the worst annual loss since 1994. Earlier Wednesday the onshore yuan fell to the weakest level since early 2008 and the offshore unit to a record low in data going back to 2010.

They devalued in 1994.

Chinese version with some additional all-is-well context: 央行警告：莫赌“单边市”，久赌必输！人民币瞬间拉升

It's a situation with binary outcomes. Either it happens or it doesn't. If the dollar moves higher, odds of a revaluation surge. If the dollar peaks, there is no need for revaluation because CNY will depreciate along with the U.S. dollar (the peg may suddenly become tighter as well if they want to close the gap with EUR,JPY and KRW).