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A note from a Deutche Bank strategist quoted in this article says that:

...we estimate that the pound’s share has likely fallen from close to 10% into low single digits since early 2015 (chart 2), consistent with the PBoC transitioning from wealth to currency management

So I take that the PBoC (People's Bank of China) has changed their overall strategy because of some change in situation(?)

I am guessing that that change for PBoC means that they are now like in a firefighting mode regarding the value of their currency?

  1. So should that reference to "wealth" be understood as in "wealth
    management"?
  2. And how does the previous situation and its aims for PBoC differ from the current one?

1 Answer 1

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One interpretation of the above is that Pound (alongside US Dollar, Euro and other major curriencies), which forms the Forex basket of countries has dropped to less than 10% weightage in case of China's Forex holding. Now the question is where did this money go, this money probably have gone into Forex market to buy Yuan against Pound/Dollar etc. to bolster or strengthen Yuan. The currency reserve management is the 'wealth' management part and the 'currency' management part is what is known as 'central bank intervention' to stabilize the currency.

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