Jitters in Shanghai, is CNY Devaluation Incoming?

shenzhen china 2021

The interbank lending rate in China shot up to 2.97% recently as the central bank tightened stimulus. Local media there reported this was an attempt to ‘protect’ against speculation, but PBOC quickly fell in line. “PBOC injected a net 78 billion yuan ($12.08 billion) into money markets,” Reuters reports today, potentially indicating that the system just can’t operate without money printing. The Chinese yuan (CNY) has been gaining on the dollar with considerable speed since June 2020. It is now at 2018 levels, just before their mass devaluation following Trump’s tariffs on Chinese goods. Those tariffs are still there, with Biden seemingly having no plans to remove them, but due to the circumstances the CNY strengthening might have kept their earnings intact especially as consumers didn’t have much choice where it concerns pandemic related goods. This relationship can perhaps be best seen on the Shanghai Composite Index (Shcomp). Shanghai stocks…

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