Jake's View | No tears needed for forex losers as the People’s Bank goes about its job with the yuan
The US dollar weakened against major currencies since late 2016 after a long period of strength. The PBOC is at last making practice catch up with policy.
Over the past ten days , the yuan has appreciated 1.1 per cent against the US dollar in the onshore market ...
Traders believe the measures taken by the PBOC are aimed at crushing speculators who have a bearish outlook on the yuan. -- SCMP, June 6
Forex traders have generally been complaining over the last few days that the People’s Bank of China has been pushing its weight around a bit too heavily to prove that it remains boss of the yuan exchange rate.
But what if the Chinese central bank is actually just doing its job, as it should, in a country where it is accepted that maintaining exchange rate stability is one of the central bank’s jobs?
In that respect, let me cite the two words “Plaza Accord” to anyone who says that exchange rate targeting is not a proper central bank function for big countries.
There never was a more blatant case of it than when the central banks of Germany, Japan and the United States conspired in 1985 to crash the US dollar against the Japanese yen.
The PBOC’s present operations are not even in the same league. Let he who is guiltless throw the first stone.
