“The move could end the one-way depreciation of the yuan and stabilize the currency in the near term, as the central bank clearly signaled its intention to keep the yuan stronger than the key psychological 7 per dollar level,” Ken Cheung, senior Asian currency strategist at Mizuho Bank Ltd., told Bloomberg.
Since the recent lows, the WisdomTree Dreyfus Chinese Yuan Fund (NYSEArca: CYB) was 2.3% higher, Market Vectors Chinese Renminbi ETN (NYSEArca: CNY) added 2.7% and the CurrencyShares Chinese Renminbi Trust (NYSEArca: FXCH) rose 1.9%.
Goldman Sachs economists led by MK Tang argued that Chinese authorities are likely to “be more proactive in signaling their yuan guidance” through the reactivation of the countery-cyclical factor. “If the guidance were not heeded by the market, there might be follow-up policy actions to imprint the guidance on the market,” Tang said in a note.
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