Since August global markets have been choppy but the renminbi has traded broadly
stable-to-firmer with two-way swings and China’s FX market has remained orderly,
with cross-border flows showing net inflows. Wang Yifeng, deputy director at
Everbright Securities’ research institute, said the Fed’s recent hike widened
the US–China yield inversion but had been largely priced in and was accompanied
by a noticeable rise in US Treasury yields. He described the Fed move as
preemptive, aimed at bolstering market confidence amid sticky inflation.
Domestic export prospects remain reasonably certain and consumer inflation in
China is mild, so the effect of US tightening on cross-border flows is judged
manageable. China’s monetary policy remains accommodative with ample liquidity
to support real-economy financing, and the renminbi has shown resilience—rate
moves in major economies are judged to have limited direct impact on the
currency.
