PBoC's Mysterious Logic

Nobody knows what the PBoC is doing.

iFeng: 新年首周人民币巨震 解读央行调控汇价的“神逻辑”

A stock trader said, "I feel very bad now, completely unable to understand central bank's thinking ..., this deprecation method, toss out all the forecasts."

This contradictory approach also attracted all kinds of speculation, and even China's stock market plunged this week, is also accused and drastic devaluation of the exchange rate are directly related.

The "All Is Well" argument is still out there:

Of course, many industry insiders and experts pointed out that the stock market and exchange rate volatility linked Earthquake and unreasonable. Because the drastic devaluation of the RMB exchange rate has little effect on the stock market, and even can be said to be positive. The current stock market turmoil is more Chinese currency because investors lack sufficient understanding of its mechanism, and thus the exchange rate-related data interpretation larger biased, causing undue panic.

Chinese Yuan University International Monetary Institute Executive Director Ben Shenglin pointed out, "the renminbi weakening the competitiveness of Chinese export enterprises will be improved, the real economy will be stronger, the level of profitability of listed companies will be strong. Can not be too simple interpretation of the stock market and currency. "

But most people say:

We look forward to more timely and effective communication

CICC chief economist Hong Liang said the author, the yuan to float more flexible mechanism during the transition, there are problems on the RMB exchange rate to be more questions than answers. What the RMB exchange rate "anchor" is? It is to begin tracking the recently released CFETS (RMB exchange rate index) baskets of it, or will still be a potential target level against the dollar in the draw? How the central bank will control the path and pace of devaluation? How dirty float will affect monetary policy?

"If the lack of adequate and effective policy communication around these issues a lot of uncertainty, could deepen market panic." Liang said.

Everyone, this is a learning experience:

Of course, analysts also pointed out that the current situation facing China has never before occurred over the past three decades, all parties should take the initiative to learn, and actively adapt to new changes.

That includes the PBoC?

"There may be people this mode of communication is not enough emphasis the central bank, the market should also reflect, of course, to do it slowly, our exchange rate market in the process of [reform], the central bank's communication level will gradually mature." He said.

The PBoC will accept your submissions if you'd like to help them explain:

China Currency Net twice on Thursday published a commentator's article, and actively explain the main reason for the recent decline in the RMB to the market, and to speculation continues to say "no", and once again stressed that China has the ability to maintain the RMB exchange rate basically stable at a reasonable and balanced level, China's central bank soon after reprinted it on the PBOC's official website.

Another article says maybe this is actually a well designed devaluation: 人民币贬值可能是央行的精心设计

The recent onshore renminbi devaluation by the central bank may be designed with the aim to observe the traders confidence in the offshore renminbi, so that in the above context to better manage exchange differences.