China Calms Yuan, Equities - Taking Points:
- Five PBOC officials commented on the Yuan and equities to boost market confidence.
- Chinese securities, banking and insurance regulators met to cope with financial risks.
- Capital outflows from China through stock links saw increases after the equity plunge.
Chinese regulators have been trying to calm the volatile Chinese market, with both equities and the Yuan plunging over the past two weeks. In specific, five China Central Bank’s (PBOC) officials have commented in a row on the market, ahead of July 6, when the US tariffs on $34 billion Chinese goods will take effect[1].
Following the remarks, the Chinese Yuan (CNH) rebounded on Wednesday, after dipping more than 1000 pips against the U.S. Dollar[2] within two days, and more than 2000 pips in total since last week; Shanghai Composite Index continued to drop, though failed to break below the previous swing low.
Here are what the top Chinese policy makers said and did, in the effort to boost the market confidence:
CHINA’S CENTRAL BANK
PBOC Governor Yi Gang told on July 3 that “we have been closely following recent moves in the FX market, which were largely driven by a strong Dollar and external uncertainties. The regulator will keep the Yuan relatively stable and at reasonable levels”.
The Governor also commented on Chinese equites on June 19, saying that “the volatility was mainly led by sentiment; investors should stay rational and calm”.
PBOC Deputy Governor and SAFE’s Chairman, Pan Gongsheng, said on July 3 that “China’s foreign reserves are sufficient. Policymakers are confident to maintain the
