Chinese Currency Faces Increasing Pressure
The Chinese government is putting in efforts to stabilize the currency markets. The central bank of the country adding verbal support to the exchange rate following a drop in the currency's value in the past week against the green back to point that was lower than a key level.
People's Bank of China is working hard to maintain the value of yuan stable vs. a basket of currencies. On Sunday, the bank's Deputy Governor Chen Yulu said n Beijing while speaking at a conference that the authority is making an effort to improve the policy framework for the Chinese currency's offshore market as well as cross-border services.
The currency has been facing increased pressure and recently PBOC sparked speculation that the central bank was defending a 6.7 per dollar level by strengthening its daily reference rate at a time when the measure of the greenback climbed higher.
However, that started speculation that PBOC is not sticking to its earlier stated policy of moving in the direction of the market.
Goldman Sachs Group Inc. earlier said that a drop in the Chinese currency affected market sentiment and also resulted in a noteworthy uptick in outflows last month.
Capital outflow is seen as a threat to the financial markets which complicates China's plan of steadily weakening the yuan to fight the fall in exports, as is a way of supporting growth in the country.