1/5
This article suggests that the reason the surge in China’s surplus isn't being matched by an equivalent rise in PBoC reserves is because there was an increase in other net capital outflows. But this is true simply by definition. The balance of...
scmp.com/economy/china-…
This article suggests that the reason the surge in China’s surplus isn't being matched by an equivalent rise in PBoC reserves is because there was an increase in other net capital outflows. But this is true simply by definition. The balance of...
scmp.com/economy/china-…
2/5
payments must always balance.
What really matters is what explains those other net capital outflows. There was of course a significant increase in net dollar assets among Chinese banks, which is where much of the suspicion lies, along with substantial errors and...
payments must always balance.
What really matters is what explains those other net capital outflows. There was of course a significant increase in net dollar assets among Chinese banks, which is where much of the suspicion lies, along with substantial errors and...
3/5
omissions, and the article quotes an analyst as suggesting that “Commercial banks are soaking up a lot of dollars so that they can use it for overseas lending and investments.”
That’s a little weird. It might have made sense two years ago when RMB interest rates...
omissions, and the article quotes an analyst as suggesting that “Commercial banks are soaking up a lot of dollars so that they can use it for overseas lending and investments.”
That’s a little weird. It might have made sense two years ago when RMB interest rates...
4/5
exceeded foreign interest rates but the RMB was expected by many to depreciate (very incorrectly, and I think the PBoC and the banks knew it was incorrect), but with the interest rate gap greater than ever and nearly everyone expecting the RMB to continue to...
exceeded foreign interest rates but the RMB was expected by many to depreciate (very incorrectly, and I think the PBoC and the banks knew it was incorrect), but with the interest rate gap greater than ever and nearly everyone expecting the RMB to continue to...
5/5
appreciate, this would be a punishing strategy for the banks.
So the question remains: why are Chinese banks borrowing RMB to buy dollars. Isn’t this what the PBoC should be doing?
appreciate, this would be a punishing strategy for the banks.
So the question remains: why are Chinese banks borrowing RMB to buy dollars. Isn’t this what the PBoC should be doing?
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