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PBOC Increases Yuan Intervention in Asia-Pacific FX News Recap

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The People’s Bank of China (PBoC) is making efforts to prevent further devaluation of the Chinese yuan (CNY) by setting a lower USD/CNY reference rate. This intervention includes Chinese state banks selling USD/CNY in the spot market at the request of the PBoC. While this initially drove the USD/yuan lower, it also provided an opportunity for USD/yuan bulls to buy at a more favorable rate. Currently, USD/CNY has returned to little change for the session. In addition, China’s publication of August Industrial Profits showed a slower decline in YTD y/y figures but a more encouraging increase in August alone.

In other news, Australia’s monthly CPI for August came in higher at 5.2% compared to July’s 4.9% y/y. However, the trimmed mean measure remained unchanged at 5.6% y/y. Notably, the August CPI excluding certain components decreased to 5.5% y/y from 5.8% in July. While the Australian dollar initially rose in response, it later returned to little net change. The New Zealand dollar followed a similar pattern but lost some ground. Overall, most major FX markets experienced small ranges with minimal net change.

In Asian equity markets, the Nikkei 225 in Japan declined by 0.5%, while China’s Shanghai Composite increased by 0.3%. Hong Kong’s Hang Seng also saw a 0.6% rise, but South Korea’s KOSPI dropped by 0.3%. Australia’s S&P/ASX 200 experienced a slight decline of 0.2%.

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