Last year, it spent a big chunk of the county’s foreign-exchange reserves to prop up the yuan. State-media have warned speculators, including billionaire investor George Soros, to back off and not short-sell the currency.
And yet the yuan keeps falling -- hitting a five-year low earlier this month and taking its drop over the past year to more than 5 percent. The PBOC doesn’t act with complete independence and sometimes bends to the will of the government, where some officials might be tempted to boost the export sector by guiding the currency down further.
China has called for a new reserve currency. And it has enough leverage to make that happen. Will it?
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