What's The New Line in the Sand for the PBoC?

An article in the Economic Observer discusses the fall below $3 trillion in foreign reserves, and closes by asking, what's the new line in the sand on the renminbi? The PBoC defended $3 trillion and USDCNY 7, now what?

EO: 中国外储破3万亿美元 “扩流入”时代来临
In fact, "3 trillion US dollars is not the bottom line of foreign exchange reserves." Xie Yaxuan said. The logic is that the private sector should hold more foreign assets from the perspective of foreign exchange market construction, exchange rate liberalization and clean floatation. The size of foreign exchange reserves held by the public sector, that is, the central bank, will steadily decline and achieve a " ".

According to IMF estimates of foreign exchange reserves, the lower limit of foreign exchange reserves at the end of the third quarter of 2016 is $ 2.67 trillion under the fixed exchange rate system and $ 1.42 trillion under the floating exchange rate system. Between the current fixed and floating exchange rate, if the RMB exchange rate to further enhance the degree of floating, the demand for foreign exchange reserves will be further reduced.

...Indeed, the new regulations or implication of open source "security reserve" means. The problem is that if the exchange rate devaluation, unlock risk - the corresponding hedge financial processing enterprises will be exchange losses. February 7, the central parity of RMB against the US dollar reported 6.8604, up more than 1% during the year. However, the market forecast, the end of 2017 7.2 yuan exchange rate, depreciation rate will be 3.6%.

"China's foreign reserves in the first half of 2017 will likely fall below the $ 3 trillion mark, then will be concern if the exchange rate can hold the 7:1 mark. People look at the future attitude is not so complicated, it is the linear extrapolation of the current situation." Beijing Normal University Center for Financial Research Zhong Wei already said.

Right now, tentatively to hold the exchange rate "7", then under the complex domestic and international financial situation and the prevention of external shock value demands, having broken the "3,000,000,000,000" dollar mark, China's foreign reserve line of defense is what?

No comments:

Post a Comment