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"On a practical level, buying yuan forwards means the PBOC wouldn’t drain yuan liquidity out of the system as it would otherwise by buying its own currency in the spot market. Policy makers cut interest rates and the reserve-requirement ratio in August, partly to replenish the funds drained during intervention. "If you have a transaction that settles down the road, the actual liquidity impact in the short term may not be as dramatic," said Citigroup’s Englander. "Down the road you can’t avoid it."
Selling dollars in the forward market may be more effective in reversing bearish yuan trades that global investors put on at a time of risk aversion, according to Jose Wynne, head of foreign-exchange research at Barclays Plc."
"On a practical level, buying yuan forwards means the PBOC wouldn’t drain yuan liquidity out of the system as it would otherwise by buying its own currency in the spot market. Policy makers cut interest rates and the reserve-requirement ratio in August, partly to replenish the funds drained during intervention. "If you have a transaction that settles down the road, the actual liquidity impact in the short term may not be as dramatic," said Citigroup’s Englander. "Down the road you can’t avoid it."
Selling dollars in the forward market may be more effective in reversing bearish yuan trades that global investors put on at a time of risk aversion, according to Jose Wynne, head of foreign-exchange research at Barclays Plc."
[text] China Finds More Discreet Ways to Support the Yuan - Bloomberg Business
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