Forget the dollar – China has its hands full propping up the yuan against 23 other currencies, report says

A man walks past an advertisement promoting China’s renminbi (RMB) or yuan ,US dollar and Euro exchange services at money exchange in Hong Kong.

Reuters/Tyrone Siu

China has been propping up the yuan against 23 currencies, Bloomberg reported.
The embattled currency dropped to a 16-year low against the dollar last week amid economic headwinds. 
Beijing’s efforts to stem the yuan’s decline appear more widespread than previously known. 

China’s central bank has been propping up the yuan against almost two dozen countries for the past month, indicating that its interventions are far broader than previously known, Bloomberg reported.

The People’s Bank of China has supported the currency against the yen, euro and sterling since mid-August, per the outlet.

Although the yuan has dipped about 2% against the dollar since the end of July, it’s gained about 1.2% on a trade-weighted basket of foreign currencies in the same period, according to Bloomberg. 

That suggests the central bank’s intervention has gone much further than its stimulus announcements last week

Last Monday the PBOC issued a stark warning to traders speculating against the yuan, sending it up 1% in the biggest one-day gain since March. 

“We will not hesitate on taking actions when necessary to firmly correct the one-sided and pro-cyclical market moves, to resolutely address the actions which disturb market order, and to unswervingly avoid the overshooting risks in the exchange rate,” the central bank said. 

This statement added to Friday’s intervention, which saw China roll out other measures designed to prop up the struggling currency. Policymakers also said they would slash the amount of foreign currency deposits financial institutions were required to hold from 6% to 4% from September 15. 

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