HomeLive CommentsYuan recovers after China warns of short selling

Yuan recovers after China warns of short selling

Chinese Yuan stages on strong rebound today, with USD/CHN breaching below 6.9 handle. Guo Shuqing, head of China’s banking and insurance regulator warned i a speech over the weekend that “shorting the yuan will inevitably suffer from a huge loss.”

He criticized that Trump’s administration is worried about Yuan’s depreciation as that could reduce the impact of higher tariffs imposed on China. At the same time,developed countries have long asked for more currency flexibility. It was “ridiculous” that as Yuan’s exchange rate becomes more market oriented, some people in the US showed fear.

At the moment, we’re not seeing any determination by the Chinese government to block USD/CNH breaking through the psychologically important 7 handle. There might be more verbal interventions. But the aim is seen as for slowing Yuan’s decline, rather than giving it a floor. USD/CNH’s could have formed a short term top at 6.9488. But we’d expect further rise through 6.9800 high after some brief consolidations.

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