CNY NEERing the End
- By Mirza Baig
- 3 min read
High-frequency data on FX settlement through end-February shows net flows have remained in surplus (Chart 2). This is thanks to portfolio inflows to local bonds and increased settlement on current account transactions. While the PBoC steered away from outright intervention, state-owned banks stepped up to absorb the surplus.
The upshot is that, from the PBoC’s perspective, the RMB is still appreciating and flows in the FX market are not in balance, despite the recent backup in USD/CNY. As such, authorities will likely press on with policies to create more channels for outflows.
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