The Chinese yuan in offshore trading soared 1.3% overnight, the largest one-day gain in at least a year, after Bloomberg reported that the Chinese government was considering new options to support the currency which fell 7% against the U.S. dollar last year.
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This was the biggest yearly decline since 1994. The most interesting measure Bloomberg mentioned was that if necessary, the government may order its state-owned enterprises to “temporarily convert some [foreign currency] holdings into yuan under the current account.”
Bloomberg also mentioned China may sell its U.S. Treasury holdings to prop up the yuan if necessary. The People’s Bank of China guided its yuan fix higher to 6.9307 this morning …
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