China’s central bank held a rare press conference on Thursday in Beijing to calm global fears about the declining value of China’s currency. But did it work?
By the end of the day, it did appear to calm the Asian markets a bit, but the language the central bank used was a bit baffling — it has left a lot of economists wondering if Beijing really has control of the situation.
The bank’s vice governor told journalists, “Trust the market, respect the market, fear the market, and follow the market,” emphasizing the market is now determining the yuan’s value.
But as someone on Twitter observed, he left something out: intervene in the market.
Because that’s what the central bank is doing. Yesterday, it dumped $20 billion worth of U.S. T-bills to bring the value of China’s currency up a little. And today, it fixed the currency decline at 1 percent, leaving many analysts scratching their heads at this contradiction between what China’s central bank is saying and what it’s actually doing, because it doesn’t appear that much has changed — Beijing is still very much in control over its currency.
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