Reuters reports, citing sources involved in China's internal policy discussions
- PBOC might take action if further rise is rapid, were to hurt country's exports
- Otherwise, would not intervene as there hasn't been any shocks from big capital inflows or outflows due to currency movement
- Some policy advisers see the yuan strengthening to 6.40 per dollar next year
- The yuan is still within a normal range and there is no big deal if it rises further
The above narrative suggests that China still has some room for tolerance to allow the yuan to strengthen further, although they will surely be aware of any major or rapid acceleration should the dollar meltdown go too far, too fast.
A drop in USD/CNY to 6.40 would mean another 2% drop from current levels. Since peaking in late May, the pair has already fallen by roughly 9%.
