Chinese Yuan drops after trading band increased16 April, 2012, 17:56. Posted by Zarathustra
Tags: CNY, Euro, RMB
Here, I no longer believe that Chinese Yuan is undervalued, and if hard landing is materialised (as I have been thinking), authorities will probably want to have Chinese Yuan depreciating. Thus important take away from the PBOC’s decision to increasing flexibility of Chinese Yuan is that this is a two-way flexibility.
So the very trading day as PBOC allowed the trading band to be widen, Chinese Yuan weakens.
Indeed, as we have shown the following chart for a number of times, USDCNY has not really moved much since late last year.
Meanwhile, EURUSD dropped below 1.30 for a minute. As said, Eurozone crisis didn’t end, and will not end.