China’s Currency Confusion

 

The Wall Street Journal today hits on something I discussed a few posts ago.  Doubts are proliferating on the Chinese central bank’s (the People’s Bank of China’s, or PBoC) capacity to manage the Chinese currency, the renminbi (or yuan).  However, the PBoC retains a much stronger element of surprise than other prominent central banks that have talked down their new monetary policy tools as “unconventional” and lost credibility in their ability to move markets toward their mandate; the retention of that element of surprise is thus allowing the PBoC to avoid overconfident investors that are certain of one-way currency bets or of the Bank’s next move in general.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s