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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    People’s Bank of China Moves Against Shorts

    Lobo
    Lobo
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    Posts : 28411
    Join date : 2013-01-12

    People’s Bank of China Moves Against Shorts Empty People’s Bank of China Moves Against Shorts

    Post by Lobo Thu 01 Jun 2017, 9:36 am

    People’s Bank of China Moves Against Shorts Central_Bank_China
    It was only last week that the People’s Bank of China (PBOC) was rumoured to be competing in the currency market, which was coincidentally followed by a Moody’s downgrade. The action demonstrated signs that positions have been cut at a loss for anyone who attempted to short the Yuan. The O/N (overnight) and T/N (Tom-next) rates ballooned today which makes running currency short positions extremely expensive to finance. The currency traded from 6.85 down to below 6.77 (off-shore) as dealers scrambled to cover short positions as everyone chased for financing. The rates market moved from around 5.25% to over 21% to cover short-term (o/n and t/n) positions.
     
    This is a popular move often undertaken by central banks if they fear the market is challenging them. The Bank of England when the GBP was forced out of the ERM raised rates to over 15% from then 11%. However, it is interesting that the options markets has (so far) seen this as a temporary move and has priced longer dated trades with only minimal impact. Many are speculating, given the new fixed approach China has taken against the USD, whether this is a friendly move to help a new President address his concerns over currency manipulation and assist a weaker USD!
    https://www.armstrongeconomics.com/international-news/china/peoples-bank-of-china-moves-against-shorts/

      Current date/time is Mon 25 Nov 2024, 8:30 pm