China’s efforts to choke capital outflows are beginning to pay off, with the offshore yuan surging the most on record as traders scrambled for a currency that’s becoming increasingly scarce outside the nation’s borders.
Bloomberg News earlier reported Chinese policy makers were encouraging state-owned enterprises to sell foreign currency.
Investors are cutting bullish positions in the dollar after the report underscored China’s determination to support the yuan.
“Given the recent capital controls, the channels for domestic institutions and retails to bring out onshore cash to the offshore market have also been tightened,” said Becky Liu, a rates strategist at Standard Chartered Plc. “There is a lack of supply of yuan liquidity.”
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