CNY/USD won't break out of the range from these comments

China Wants to Make Yuan International, but Without Removing the Peg

Posted Friday, August 14, 2020 by
Skerdian Meta • 1 min read

China has its currency pegged to the US Dollar, at around 6-7 Yuan for a Dollar. That was one of the issues US president Donald Trump had with China. China has become one of the major global economies, but it still keeps the Yuan pegged to the USD, which is not very dignifying for a global giant.

The Chinese central bank is trying to internationalize the Yuan, making it more attractive for foreigners, but without removing the peg. Or, are they heading towards that direction, especially now that the tensions with the US are elevated. Below are the comments from the PBOC:

Comments by the Chinese central bank

  • Will push forward with yuan internationalisation
  • Will remove obstacles for use of yuan both domestically and overseas
  • Will make it easier for foreign investors to invest in Chinese bonds, stocks
The PBOC offers these remarks from time to time to appease market participants and continue to keep the image that its currency market is “fair game”, which is not. Nothing really new here but it just reaffirms that there are no changes to the narrative.
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