People’s Bank of China widens (PBoC) Yuan trading bands

Posted: March 17, 2014 in Uncategorized
Tags: ,

The PBoC doubled the yuan trading bands.

This is a signal that the Chinese government is undeterred of making China more like a normal market.

Until now For EX investing in China was extremely easy. You invested and you knew that the Yuan would be rising against US Dollar. Very easy money for professionals. 

Now this is a signal that the one-way bet will not  so easy any more.

Which means

Hot money (speculators) will likely to leave China

Chinese exporters (and shadow banking)have a welcoming space to breath

So in all, probably not much will change and it is a good thing…a step towards total freedom.

But it also highlights that China will effectively behave more like a Western country – let the market do its work – letting go bankruptcy some companies and saving the one too big to let fail.

Good for the long term, but volatile in the short term.

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