- FX reserves in China reached $3.821trn at the end of last year and, at the current pace, are set to reach $4trn by May. Last year, the PBoC warned that the country’s reserves were high enough.
- It would therefore make little sense for China to weaken its currency to boost its exports, which would run against its desire of slowing the growth in their FX reserves.
- As demand in the US, the eurozone and Japan is picking up, Chinese exports should tick over without the authorities having to depreciate the currency.
- The PBoC may instead be preparing the ground to widen the trade band further instead of weakening the currency to boost income from exports
Published: 2014-02-26 17:57:00 UTC+00
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