Download Outlook for China`s Onshore Market

Outlook for China’s Onshore Market
February 7th, 2017
Mizuho Bank (China), Ltd.
Treasury Division
Copyright (c) Mizuho Bank, Ltd. All Rights Reserved.
1-1. Topics (1): Eleven currencies added to the CFETS Index, lowering the ratio of the U.S. dollar
¾ On December 29 last year, the China Foreign Exchange Trade System (CFETS) (an organization under the People’s Bank of China) announced its decision to add
eleven currencies to the currency basket that makes up the CFETS Index. This change was applied as of January 1, 2017. The CFETS Index takes the trade weighted
average as of the end of 2014 as 100. However, the details apart from the currencies have not yet been announced, including the detailed method of calculation, etc.
¾ Following the addition of the new basket currencies, the ratio has decreased for the U.S. dollar, the euro, and the Japanese yen, while the ratio has increased for the
currencies of emerging countries. As the currencies of emerging countries are more volatile than major currencies in general, the CFETS Index may fluctuate more in
the times ahead. In particular, market participants are likely to sell the overall emerging currencies when risk-averse sentiment strengthens in the market. In such a
phase, the relative value of the Chinese yuan would increase. Therefore, some see the Chinese monetary authorities as being more likely to accept the depreciation
against the U.S. dollar, which has a high composition ratio, in order to maintain the stability of the Chinese yuan.
Change in the basket currencies in the CFETS Index
Currency
USD
EUR
JPY
HKD
GBP
AUD
NZD
SGD
CHF
CAD
MYR
RUB
THB
ZAR
KRW
AED
SAR
HUF
PLN
DKK
SEK
NOK
TRY
MXN
U.S. dollar
Euro
Japanese yen
Hong Kong dollar
British pound
Australian dollar
New Zealand dollar
Singapore dollar
Swiss franc
Canadian dollar
Malaysian ringgit
Russian ruble
Thai baht
South African rand
Korean won
United Arab Emirates Dirham
Saudi Arabian riyal
Hungarian forint
Polish zloty
Danish krone
Swedish krona
Norwegian krone
Turkish lira
Mexican peso
New
22.40%
16.34%
11.53%
4.28%
3.16%
4.40%
0.44%
3.21%
1.71%
2.15%
3.75%
2.63%
2.91%
1.78%
10.77%
1.87%
1.99%
0.31%
0.66%
0.40%
0.52%
0.27%
0.83%
1.69%
Old
26.40%
21.39%
14.68%
6.55%
3.86%
6.27%
0.65%
3.82%
1.51%
2.53%
4.67%
4.36%
3.33%
Rate of change
-4.00%
-5.05%
-3.15%
-2.27%
-0.70%
-1.87%
-0.21%
-0.61%
0.20%
-0.38%
-0.92%
-1.73%
-0.42%
Performance (%, against Chinese yuan) since the end of 2014 by currency
16.00
12.00
* Period December 31, 2014-December 30 2016
14.61
12.00
11.91
11.91
The shaded currencies are the
latest additions.
11.90
9.20
8.00
7.15
2.86
4.00
2.53
1.84
0.00
0.00
Latest additions
-10.00
-0.47 -0.53 -1.32
-2.54 -2.71 -3.24 -3.48
-4.05 -5.29
-5.76
-11.34
-12.78
-20.00
-20.35
-30.00
-25.84
Source: Bloomberg
1
1-2 Topics (2): Gap between the onshore market (CNY) and the offshore market (CNH) expanded
¾ At the beginning of 2017, the Chinese yuan appreciated rapidly against the U.S. dollar in the offshore market. This was mainly due to the fact that Chinese yuan liquidity
in the offshore market tightened dramatically because of the restrictions on capital outflow as strengthened by the Chinese monetary authorities, along with capital
demand before the Chinese New Year, which sharply heightened interest rates.
¾ In addition, the minutes of the FOMC meeting in the U.S. (held on December 13 and 14) were released on January 4, revealing concerns over downward risks to the
economy due to the appreciation of the U.S. dollar, and this heightened cautious sentiment toward the appreciation of the U.S. dollar in the market. The Chinese yuan
appreciated against the U.S. dollar in the offshore market (CNH), and the exchange rate temporarily fell below CNH 6.80 to the U.S. dollar. Following this trend, the
Chinese yuan in the onshore market (CNY) also appreciated against the U.S. dollar. As a result, as of January 6, the CNH-CNY gap was approximately 800 pips, with
the Chinese yuan stronger in the offshore market.
¾ Even though the rapid appreciation of interest rates in the offshore market seems to be temporary, it is likely that the Chinese yuan interest rates will remain high until
the end of the Chinese New Year. While the Chinese monetary authorities remain cautious, the trend in the Chinese yuan exchange market is expected to slow down
for the time being.
CNH and CNY exchange rate, with the spread between the two
7.0
6.9
0.20
CNH-CNY(右軸)
CNH-CNY (right axis)
CNY(左軸)
CNY (left axis)
0.15
CNH (left axis)
CNH(左軸)
7.00
0.04
* The chart shows the
change after every 15
minutes.
6.95
0.02
0.00
0.10
6.8
-0.02
6.90
0.05
-0.04
6.7
0.00
6.85
-0.06
CNH-CNY(右軸)
CNH-CNY (right axis)
6.6
-0.05
6.80
-0.08
CNY(左軸)
CNY (left axis)
CNH(左軸)
CNH (left axis)
6.5
6.4
Jan-16
-0.10
-0.10
-0.15
Apr-16
Jul-16
Oct-16
Jan-17
6.75
2017/1/3
09:30
2017/1/4
09:30
2017/1/5
09:30
-0.12
2017/1/6
09:30
Source: Bloomberg
2
2. USD/CNY exchange market (latest trends)
The one-sided appreciation of the U.S. dollar ended, and the Chinese yuan appreciated significantly.
¾ In the middle of December, ECB Governor Mario Draghi made an unexpectedly dovish remark after the ECB Committee meeting. As a result, the euro/U.S. dollar
exchange rate fell even further. The Chinese yuan then depreciated against the U.S. dollar as well to 6.96 level. Thereafter, the number of market participants
decreased before the Christmas holidays, and the U.S. dollar/Chinese yuan exchange rate kept moving between the 6.94 – 6.95 level.
¾ On January 3, the change in the currency basket for the CFETS Index mentioned on the previous slide was applied. However, the onshore Chinese yuan exchange
market did not move significantly.
¾ On January 4, however, the minutes of the FOMC meeting turned out to not be as hawkish as expected, which encouraged market participants to sell the U.S. dollar.
Furthermore, the Chinese yuan appreciated rapidly in the offshore market. As a result, the People’s Bank of China central parity rate rose to the CNY 6.86 level, with
the Chinese yuan appreciating rapidly against the U.S. dollar. The appreciation range of the Chinese yuan was the largest seen since 2005. The onshore Chinese yuan
appreciated against the U.S. dollar by more than 600 pips in one day. The U.S. dollar/Chinese yuan exchange rate once fell below CNY 6.87, although the exchange
rate gradually returned to CNY 6.92 thereafter.
¾ On January 11, U.S. President-elect Donald Trump held a press conference, and a feeling of disappointment spread throughout the market, strengthening U.S. dollarselling. As a result, the Chinese yuan, which had gradually depreciated, started to appreciate again, and the U.S. dollar/Chinese yuan exchange rate reached the CNY
6.89 level.
104
103
U.S. dollar/Chinese yuan exchange rate and the U.S. dollar Index
(over the past three months)
7.00
6.95
102
6.90
101
6.85
100
6.80
99
98
ドルインデックス（左軸）
USD index (left axis)
97
ドル/人民元実勢相場（右軸）
USD/CNY exchange rate (right axis)
6.75
6.70
96
PBOC fixing rate (right axis)
人民銀行仲値（右軸）
95
6.65
6.60
94
10月
October
11月
November
2016
12月
December
January01月
2017
Source: Bloomberg
3
3. JPY/CNY exchange market (latest trends)
The “Trump rally” slowed down, and the Japanese yen appreciated against the U.S. dollar.
¾ In the second half of December, the U.S. dollar/Japanese yen exchange rate rose steadily to approach the JPY 118 level because of the interest rate hike in the U.S.,
along with the expectations for the economic measures to be taken by U.S. President-elect Donald Trump. The Japanese yen once appreciated against the U.S. dollar
thereafter toward the end of the year, as market participants sold accumulating long U.S. dollar positions to take profit, while geopolitical risks were heightening due to
the terrorist attacks in Turkey and Germany. The Japanese yen/Chinese yuan exchange rate remained within a narrow range between CNY 5.90 and CNY 5.95.
¾ On January 4, the minutes of the FOMC meeting turned out to be not as hawkish as expected in the market. As a result, the U.S. dollar/Japanese yen exchange rate fell
from the lower-JPY 117 level to the upper-JPY 115 level. Thereafter, at the press conference of U.S. President-elect Donald Trump, there was no mentioning of fiscal
expansion or tax cut measures as was expected in the market. As a result, a sense of disappointment spread throughout the market, and the depreciation of the U.S.
dollar accelerated. The U.S. dollar/Japanese yen exchange rate once fell below JPY 114. Also, the Japanese yen/Chinese yuan exchange rate rose rapidly to
temporarily reach the CNY 6.05 level. The exchange rate returned to approach CNY 6.00 thereafter.
119
117
Japanese yen/Chinese yuan exchange rate and
the U.S. dollar/Japanese yen exchange rate
(over the past three months)
5.8
5.9
115
6.0
113
6.1
111
6.2
109
6.3
107
6.4
105
6.5
103
USD/JPY (left axis)
ドル/円（左軸）
101
JPY/CNY (right axis, inverted)
円/人民元（右軸・反転）
99
October
10月
6.6
6.7
November
11月
2016
December
12月
01月
January
2017
Source: Bloomberg
4
4. Macro-economic data of China: Summary of economic indices
Category
Economic index
Economic growth
GDP
(year-on-year)
Economic trends
Month
2016/3Q
Result
6.70%
Previous
Comment
6.70%
The economic growth rate remained at the same level as the last quarter,
at +6.7%, the same as market expectations. There are many factors of
uncertainty in the Chinese economy, and economic recovery remains slow.
Even though the manufacturing PMI fell slightly from November, the figure
remained above 50, the turning point in assessing the economic
conditions for the fifth consecutive month. The Chinese economy has
been gradually recovering.
Manufacturing PMI
Dec. 2016
51.4
51.7
Trade balance
Dec. 2016
275.4 billion
yuan
298.1 billion
yuan
Trade statistics Exports (year-on-year)
(in Chinese yuan)
Dec. 2016
0.6%
5.9%
Imports (year-on-year)
Dec. 2016
10.8%
13.0%
CPI
(year-on-year)
Dec. 2016
2.1%
2.3%
As price inflation slowed down for pork and vegetables, the December CPI
declined slightly. As food prices are relatively stable, inflation pressure is
likely to be limited on a short-term basis.
PPI
(year-on-year)
Dec. 2016
5.5%
3.3%
In addition to the fact that commodity prices appreciated, domestic
demand increased, which kept the PPI high. Due to the production cut by
the OPEC countries, the crude oil price is likely to continue appreciating.
11.4%
The growth rate of the December M2 money supply turned out to be lower
than expected in the market. However, because of vigorous capital
demand by various industries, the year-on-year growth rate turned out be
over 10%.
As external demand remains low, the year-on-year growth in exports
declined significantly compared to the previous month. On the other hand,
imports turned out to be stronger than expected in the market, thanks to
growing domestic demand, although year-on-year growth declined. The
downward pressure on exports is expected to grow stronger in the times
ahead, due to mounting uncertainty regarding the international trade policy
toward China under the new U.S. government led by President Trump.
Price statistics
Monetary policy
Money Supply M2
(year-on-year)
Dec. 2016
11.3%
Source: Bloomberg
5
5. Outlook for the Chinese yuan exchange market (end of each quarter)
USD/CNY
100JPY/CNY
CNY/JPY
EUR/CNY
2017
January to March
6.80
to
7.10
(6.95)
5.62
15.63
6.94
to
(5.89)
6.40
to
17.79
(17.0)
to
(7.16)
7.67
April to June
July to September
October to December
6.95
to
7.25
(7.10)
7.00
to
7.30
(7.17)
7.00
to
7.30
(7.17)
5.84
to
(6.23)
5.93
to
(6.46)
6.09
to
(6.70)
15.03
7.16
6.65
to
17.12
(16.1)
to
(7.46)
7.98
14.79
7.35
6.76
to
16.86
(15.5)
to
(7.67)
8.25
14.38
7.35
6.95
to
16.43
(14.9)
to
(7.74)
8.25
Forecast by Mizuho Bank (China), Ltd. The figures in parentheses are forecasts for the closing rate of each quarter.
Key factors
9
The financial market is expected to remain unstable for a while, given the unexpected victory of Donald Trump in the U.S.
presidential election.
9
It seems that the Chinese monetary authorities will accept the moderate depreciation of the Chinese yuan while preventing
excessive downside pressure on the Chinese yuan, in order to cover the decline in exports and pressure for capital outflow.
9
9
Pressure for capital outflow is likely to remain. The Chinese yuan is expected to continue moderately depreciating in 2017.
9
The inclusion of the Chinese yuan into the SDR currency basket (from October 1, 2016) is a factor to increase the composition
ratio in foreign currency reserves among the IMF member countries in the medium-to-long term. The Chinese monetary authorities
are likely to aim to achieve stability in the Chinese yuan exchange market in order to internationalize the Chinese yuan.
9
Under the Trump administration, the appreciation of the U.S. dollar is unlikely to continue. However, inflation risks may increase if
there are more assertive fiscal policies and measures against reflation in 2017. Therefore, more interest rate hikes and the
appreciation of the U.S. dollar are possible in the times ahead.
9
The Chinese yuan may depreciate under the management of the currency basket if the sense of uncertainty grows regarding the
Brexit or if downward pressure strengthens on European currencies.
There is no change in the 13th five-year plan and in the decision taken at the National People’s Congress held in March 2016, as
well as in medium- to long-term economic support by the Chinese government. The main scenario is that L-shaped economic
growth will continue for a while.
6
6. Trends in the Chinese yuan interest rate market
¾ As the main focus has been shifted from “growth support” to “curbing asset bubbles” and “preventing financial crises,” the monetary policy has also been shifted
from “easing” to “neutral” in the direction of tightening.
¾ Market participants are well aware of the intentional raising of interest rates.* While fund procurement is necessary for the year-end and the Chinese New Year, the
monetary conditions have been tightened as had been planned by the Chinese monetary authorities. As a result, the interest rate level has appreciated
significantly.
* It is also clear that the interest rates have been raised in order to clear bond leverage.
* It is expected that off-balance sheet wealth management products will be treated in the same way as those that are on balance sheet transactions.
¾ Monetary tightening may continue throughout 2017.
Major interest rates
14
12
4.2
O/N SHIBOR
1W SHIBOR
3M SHIBOR
CDB2Y
CDB3Y
3.8
3.4
3.0
10
2.6
2.2
8
1.8
Jan-16
6
Apr-16
Jul-16
Oct-16
Jan-17
4
2
0
Jan-13 Apr-13
Jul-13
Oct-13 Jan-14 Apr-14
Jul-14
Oct-14
Jan-15 Apr-15
Jul-15
Oct-15 Jan-16 Apr-16
Jul-16
Oct-16
Source: Bloomberg
7
7. Upcoming key events
China
Date
Jan. 20
Indices and events
GDP
Industrial production
Jan. 20
Retail sales
Manufacturing PMI
Feb. 1
Non-manufacturing PMI
Feb. 3
Caixin Manufacturing PMI in China
Feb. 7
Caixin Services PMI in China
Feb. 7
Foreign currency reserves
Trade statistics
Feb. 10
Feb. 14 CPI
PPI
Feb. 10-15 Money supply M2
Japan
Date
Jan. 25
Jan. 27
Indices and events
December trade statistics
CPI
Unemployment ratio, effective
opening-to-application ratio
U.S.
Date
Jan. 18
Jan. 19
Jan. 26
Feb. 1
Indices and events
CPI
Housing starts
New home sales
Markit U.S. Manufacturing PMI
Manufacturing ISM Report On Business
Feb. 1
Feb. 3
Feb. 15
ADP employment statistics
Employment statistics
Retail sales
Industrial production
Jan. 31
FOMC (Until Feb. 1)
Political events in the U.S.
Date
Events
Jan. 20 Inauguration of the new government
Speech to both houses
Until May Budget message
Europe
Date
Jan. 18
Jan. 24
Jan. 24
Jan. 25
Feb. 14
Feb. 14
Country
EU
EU
Germany
Germany
Germany
U.K.
Feb. 14
EU
Jan. 19
Feb. 2
EU
U.K.
Indices and events
CPI
Markit Eurozone Manufacturing PMI
Markit Germany Manufacturing PMI
IFO Business Climate Index
ZEW
CPI
PPI
Industrial production
ECB Committee meeting
MPC
Political and economic events in Europe
Indices and events
Date
Mar. 15
The Dutch House of Representatives election
Apr. 23
First voting for the French presidential election
May 7
Final voting for the French presidential election
"First hundred days"
Jan. 30
BOJ monetary policy meeting
(Until Jan. 31)
Sep. 30
Oct. 1
Submission deadline for budget
proposal for the year 2018
Start of the budget for the year 2018
Source: Bloomberg
8
8. Global market: USD/JPY exchange market (over the past year)
130
Period: January 1, 2016 to January 11, 2017
USD/JPY exchange rate: JPY 99.02-121.69
125
January 29
The BOJ decided to introduce a
negative interest rate.
120
March 29
FRB Chair Janet Yellen made
a cautious statement
regarding the interest rate
hike.
June 24
There was a rapid appreciation
of the Japanese yen caused by
risk-averse sentiment in the
market, resulting from the
Brexit.
July 29
The BOJ made a decision on
additional
measures
of
monetary easing, although
the scale was smaller than
the market expectations.
Also, the GDP of the U.S. in
the second quarter turned
out to be weaker than
expected.
115
110
December 14
The interest rate was raised
in the U.S.
September 21
The BOJ decided to
introduce additional
measures
of
monetary
easing
(yield curve
control
and
overshooting
commitment).
105
100
95
January
01月
April 28
The BOJ unexpectedly
decided to maintain the
existing monetary policy.
July 8 and August 5
The employment statistics of the U.S. turned out to be
significantly stronger than expected.
April
04月
July
07月
October
10月
November 9
Against market expectations,
Donald Trump was elected
as the next U.S. President.
January
01月
2016
2017
Source: Bloomberg
9
9. Global market: EUR/USD exchange market (over the past year)
Period: January 1, 2016 to January 11, 2017
EUR/USD exchange rate: USD 1.0341-1.1616
October 4
The
media
reported that the
ECB slowed down
asset purchase
(tapering).
→ The report was
denied thereafter.
1.17
1.15
November 9
Against market
expectations,
Donald Trump
was elected as
the next U.S.
President.
1.13
December 8
Decision to extend
the
bond
purchasing
program
1.11
1.09
1.07
1.05
January 21
ECB Governor Mario
Draghi expressed his
intention to revise the
monetary policy at
the
next
ECB
meeting.
1.03
January
01月
March 10
ECB Governor Mario
Draghi stated that
there would be no
more measures of
monetary
easing,
after
the
announcement of an
additional measure
of monetary easing.
April
04月
June 24
Pressure
to
sell the euro
strengthened,
due to the
Brexit.
July 8 and August 5
The employment
statistics of the U.S.
turned
out
to
be
significantly
stronger
than expected.
July
07月
2016
October
10月
January
01月
2017
Source: Bloomberg
10
10. Summary: Outlook for major currencies (end of each quarter)
2017
January to March
USD/JPY
EUR/USD
EUR/JPY
April to June
July to September
October to December
111
to
121
(118)
109
to
119
(114)
108
to
118
(111)
105
to
115
(107)
1.02
to
1.08
(1.03)
1.03
to
1.10
(1.05)
1.05
to
1.13
(1.07)
1.05
to
1.13
(1.08)
113
to
124
(118)
112
to
123
(117)
113
to
124
(116)
110
to
121
(112)
Forecast by Mizuho Bank (China), Ltd. The figures in parentheses are forecasts for the closing rate of each quarter.
Key factors
9 Outlook for the U.S. dollar/Japanese yen exchange market in 2017:
“Game of chicken” between U.S. politics under Trump and the U.S. dollar exchange market
Important facts:
9 2016 was the “beginning of the end” of the appreciation of the U.S. dollar. This trend is expected to continue in 2017.
9 U.S. dollar: The impact of the appreciation of the U.S. dollar has not yet been settled. Would this be acceptable for
President-elect Donald Trump?
9 Japanese yen: While there have been limited measures taken by the Bank of Japan, the Japanese yen exchange
market will have to follow the settlement in the U.S. dollar exchange market.
9 Euro: The fundamentals have been robust. As is the case with the Japanese yen, it is likely to be easy for the euro to
appreciate.
11
Reference (1): USD/CNY exchange market (over the past year)
7.0
Period: January 4, 2016 to January 11, 2017
USD/CNY exchange rate: CNY 6.4502-6.9666
6.9
6.8
January 4
The trading hours in the inter-bank foreign
exchange market were extended (until
23:30).
January 8
Even though the circuit breaker system was
introduced on January 4, the system was
discontinued on the fifth business day due to
the rapid depreciation of stock prices.
June 24
Risk-averse
sentiment grew in
the market as a
result of the Brexit
referendum.
October 1
The Chinese
yuan
was
included in
the
SDR
currency
basket.
January 4
Following the rapid
appreciation of CNH,
CNY also appreciated
against the U.S. dollar.
6.7
March 1
The RRR was cut.
(17.5% →17.0%)
6.6
May 18
The minutes of the FOMC meeting in the
U.S. turned out to be hawkish, which fueled
expectations for an
interest rate hike in the U.S., leading the
U.S. dollar to appreciate against the
Chinese yuan.
6.5
6.4
January
01月
April
04月
July
07月
2016
October
10月
November 9
Against market expectations,
Donald Trump was elected as
the next U.S. President.
November 10
The U.S. dollar/Chinese yuan
exchange rate exceeded CNY
6.80 for the first time since
September 2010. The Chinese
yuan continued to depreciate
because of the uptrend in the
U.S. dollar exchange market.
January
01月
2017
Source: Bloomberg
12
Reference (2): JPY/CNY exchange market (over the past year)
130
Period: January 4, 2016 to January 11, 2017
JPY/CNY exchange rate: CNY 5.4117-6.6598
January 29
The BOJ decided to introduce a
negative interest rate
125
120
115
110
105
April 28
The
BOJ
unexpectedly
decided to maintain
the
existing
monetary
policy at its meeting.
100
July 29
Although the BOJ
decided to introduce additional
measures of monetary easing,
the scale was smaller than the
market expected.
The second quarter GDP of the U.S.
turned out to be weaker than the
market expected.
November 9
Against market
expectations,
Donald Trump
was elected as
the next
U.S. President.
December 14
The interest rate
was raised in the
U.S.
5.0
5.2
5.4
September 21
The
BOJ
decided
to
introduce
additional
measures of
monetary
easing
(yield
curve
control
and
overshooting
commitment).
5.6
5.8
6.0
6.2
June 24
The
Japanese
yen
appreciated sharply due to
risk-averse sentiment after
the Brexit referendum.
6.4
ドル/円（左軸）
USD/JPY
(left axis)
6.6
JPY/CNY
(right axis, inverted)
円/人民元（右軸・反転）
95
January
01月
2016
6.8
April
04月
July
07月
October
10月
January
01月
2017
Source: Bloomberg
13
Reference (3): Chinese yuan exchange market since 2005
2005: Commencement of the revaluation of the Chinese yuan
2008-2009: Temporary introduction of a fixed exchange rate system after the financial crisis in the U.S.; resumption of the appreciation of the Chinese yuan in 2010
2014: Depreciation of the Chinese yuan once again after the interest rate cut in Nov., despite the Chinese yuan exchange rate fluctuating in both directions
2015: Calculation method for the central parity rate changed by the People’s Bank of China on August 11, which meant the devaluation of China's currency (from the
CNY 6.21 level to the CNY 6.40 level)
¾ 2016: Depreciation of the Chinese yuan against the U.S. dollar to the level seen in 2011, at the beginning of the year; despite the Chinese yuan rallying after the Chinese
New Year, after which, another commencement of the depreciation of the Chinese yuan against the U.S. dollar; continued depreciation of the Chinese yuan to its lowest
level since 2008 as a result of risk-averse sentiment in the market after the victory of the supporters of the Brexit in the referendum carried out in the U.K. in June, as well
as expectations for economic stimulus after the victory of Donald Trump in the U.S. presidential election carried out in Nov.
¾
¾
¾
¾
The Chinese monetary authority
announced its plan to enhance
the flexibility of the exchange
rate.
8.0
7.5
6.5
China started to reform foreign
exchange control, shifting to a
managed floating rate system,
referring to the currency
basket.
March 17, 2014
Widened the
fluctuation
band of the
yuan's
exchange rate
August 11, 2015
PBOC devalued
the Chinese yuan
CNY
appreciation
7.0
Revaluation of the Chinese
yuan by 2.1% on July 21, 2005
April 14, 2012
Widened the
fluctuation band of
the yuan's
exchange rate
CNY
depreciation
U.S. dollar/Chinese yuan exchange rate
8.5
6.0
05
9.5
06
07
08
09
10
11
12
13
14
15
16
17
10
11
12
13
14
15
16
17
CNY
depreciation
Japanese yen/Chinese yuan exchange rate
8.5
7.5
CNY
appreciation
6.5
5.5
4.5
05
06
07
08
09
Source: Bloomberg
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