This article is published in collaboration with The Financial Times.
What is it exactly that is spooking world currency markets?
So why is something that doesn’t dominate trading, dominating trading?
The offshore renminbi is one mechanism through which investors’ rising fears about China’s economy can be expressed — hence its weakness. The fact that the tightly managed onshore rate is also softening, albeit more gradually, is considered by international investors to be official validation of their sell-China bets.
Fouad Bendris’s insight:
If there’s a basket that tells us what the PBoC is tracking, why are we fixated on the renminbi-dollar rate?
Source:: Strategy & Governance