China: Not letting market forces drive the yuan - BBH

Research Team at BBH, notes that earlier today, the PBOC "fixed" the yuan at its lowest level since March 2011 as the dollar has been trending higher against the yuan steadily even if slowly all month and today it is at three-month highs.

Key Quotes

“Yesterday, the Wall Street Journal thought it was news that China is not letting market forces drive the yuan. We have long discussed the gap between China's declaratory policy and its operational policy. Today, Bloomberg reports that the Chinese delegation to the upcoming Strategic and Economic Dialogue talks (June 6-7) is keenly interested in whether the Fed hikes in June or July.

The report claims China would prefer July. Can it really make that much of a difference? Is this a topic for a strategic discussion? Even though the Federal Reserve may practice a type of democratic centralism that is familiar in China, can Yellen (Fed chair often attends the talks) commit one way or the other, and even if she could, would she (or the US) want to?”