<p>Yesterday's mid-rate setting for the onshore yuan was instructive. The People's Bank of China set the rate around a big figure lower than the estimate:</p><ul><li><a href="https://www.forexlive.com/centralbank/pboc-sets-usd-cny-mid-point-today-at-68698-vs-estimate-at-68799-20220829/" target="_blank" data-article-link="true">PBOC sets USD/ CNY mid-point today at 6.8698 (vs. estimate at 6.8799)</a></li></ul><p>i.e the Bank did not devalue the yuan as much as was expected. </p><p>I posted yesterday on the concern the People's Bank of China have with capital flight out of the country. </p><ul><li><a href="https://www.forexlive.com/centralbank/usdcnh-highs-above-691-what-the-pboc-will-do-if-yuan-weakens-even-further-20220829/" target="_blank" data-article-link="true">USD/CNH highs above 6.91 – what the PBOC will do if yuan weakens even further</a></li></ul><p>A rapidly falling yuan would make capital flight more likely, hence the efforts of the Bank to slow the rate of decline of yuan. </p><p>The expectation for the rate setting from the PBOC today is 6.9076. I can't see them allowing that. Under 6.9 seems likely again today. </p><p>Offshore yuan, though, is sitting above the 6.9 level (for USD/CNH):</p>
This article was written by Eamonn Sheridan at www.forexlive.com.
