If the PBOC wishes to keep the CNY on the weaker side it might have a modest effect on imports and provide a bit of support for competiveness vs regional Asian countries (US whiners will bang the "manipulation" drum) - interesting because the PBOC's tightening on the domestic monetary front so band widening could offset some of that // as a controlled currency we need to know the goal of the Planners not the market reaction -- maybe KRW, S.E. Asian may see a bit of upset -- it's just another weight on the slowing China demand for AUD // energy and luxury importers may be affected
GVI Forex13:18:15 GMT - 03/16/2014
WSJ - "Today's band widening strengthens the PBOC's signal that the one-way bet on the yuan is over and we should expect more yuan/dollar volatility going forward," Lu Ting, economist at Bank of America Merrill Lynch, wrote in a note to clients.
"We believe the PBOC won't stop here, but further band widening is of little meaning. A much more important and meaningful reform is to change the rule on setting the daily fixing of yuan/dollar. As an intermediate step, the PBOC could peg the yuan to a basket of currencies weighted by the importance of (China's) trading partners."
GVI Forex Jay Meisler 09:53:11 GMT - 03/16/2014
Question for the forum
What are the FX implications for other currencies of China widening the band other than increasing the two-way risk in the CNY?
GVI Forex Jay Meisler 22:01:36 GMT - 03/15/2014
* Central bank widens band; yuan can move up or down 2 percent from midpoint
* Last widening occurred in April 2012
* Seen as introducing more risk into market to discourage speculation
* Cbank intervened to push down exchange rate in Feb-Mar
* Yuan down 1.6 pct in 2014
* Traders question effectiveness of widening if midpoint used as leash
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