WSJ: ‘Brexit’ Upends China’s Plans for Turmoil-Free Summer
A few days before Britons voted to leave the European Union, Chinese Premier Li Keqiang visited the central bank’s monetary-policy department to make a simple point: The yuan must be kept stable.The gap will widen. Prepare accordingly.
...China is on the receiving end of global market turbulence triggered by the “Brexit” shock. And no part of its financial system is more vulnerable than the yuan, already the subject of a precarious central-bank high-wire act.
With all major currencies except the dollar and yen plunging in the wake of the British vote, pressure grows on the People’s Bank of China to also let the yuan weaken. But if the gap with the dollar becomes too big, capital outflows could speed up again.
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