People's Bank of China Weakens Yuan Against Dollar by 0.87% Monday

People's Bank of China Weakens Yuan Against Dollar by 0.87% Monday

China's FX reserves likely fell to $3 trillion in December from $3.052 trillion in November, the lowest since April 2011, according to a separate Reuters poll - extending a trend in place during most of a year ago that highlights the difficulty Beijing faces in preventing the yuan from falling rapidly.

The 41.1-billion-USD drop was down from November's 69.1-billion-USD fall and marks the sixth straight month of falling forex reserves.

Chinese authorities have allowed liquidity in the offshore yuan market to run dry since the beginning of December, permitting a steady rise in interest rates, which culminated in last week's spike after authorities explicitly requested state-owned enterprises sell foreign currency.

Moreover, if the foreign exchange reserves of China continue to melt rapidly, the central government will have no other choice and will proceed to another single sharp devaluation as the summer of 2015.

The yuan fell 0.9 percent against the U.S. dollar last month, capping a 6.5 percent drop over the year.

Apple Obeys Beijing, Removes New York Times App From China Store
It would seem that this has changed since both the Chinese and English versions of the news app were taken down on December 23rd. China has many times censored several USA based websites and newspapers, and there is no doubt in this fact.

The People's Bank of China is hoping to prop up the yuan in the face of a rising U.S. dollar.

Adding to the pressure, Trump has vowed to label China a currency manipulator on his first day in office, and has threatened to slap huge tariffs on imports of Chinese goods.

A close look at the change in capital flows as shown in forex reserves data shows a slew of recent measures have taken effect, according to a report released Sunday by Chinese investment bank CICC. The pound is down by around 2.3% against the dollar from its year-to-date high of 1.24 printed at the end of last week.

SAFE said in late December that net cross-border capital outflows were expected to narrow in the fourth quarter in 2016, while the People's Bank of China (PBOC) said last week that it would push reforms of the yuan regime, while keeping the currency basically stable in 2017. The yuan recorded a record rally 1.9% against the dollar in the days following rising from around 6.95 to 6.78. The PBOC earned plaudits past year for adhering more closely to a new fixing method that takes into account global currency moves and previous day's yuan price.