FXStreet (Delhi) – Research Team at Nomura, note that the Chinese intervention in its domestic currency market is slowing in September, as compared to the August when the PBOC injected as much as $120-130bn Yuan to support its currency from sliding further.
Key Quotes
“In September, onshore interventions seem to have progressed at a pace somewhat below that seen in August. We estimate that intervention in the onshore market in the first half of September amounted to USD22bn, which would be around USD44bn for the full month if the current pace were maintained in the second half of September. This is somewhat consistent with the drop in onshore spot trading volumes, which averaged USD26bn from 1-14 September, compared with USD35.6bn over 11-31 August 2015.”
“This is a significant drop compared with August, but there has also been USD selling intervention in USD/CNH, which we estimate was around USD10bn selling in spot USD/CNH since the start of September and around USD15bn of selling in the CNH FX forward market in the same period (the spot transactions will affect reserves immediately, while the forward transactions will only affect reserves at maturity – or even later if forward positions are rolled).”
“Adding up both CNY and CNH intervention, the total MTD intervention is USD47bn, pointing to sizeable intervention, but perhaps below the peak levels observed in the weeks following the devaluation announcement on August 12th.”
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