(ATF) – Asian equity markets tried hard on Wednesday to replicate the stellar Tuesday US markets performance.
It wasn’t quite enough for new records, but the best showing since 2008. That and continued easing of dollar shortages globally thanks to unlimited central banks largesse pushed the USD down for a second day straight day, from 101.8000 on the DXY gauge to 101.2000 at 6pm HK time.
Since then, as US stocks futures erased earlier gains, the DXY regained the 101.5000 level.
The Chinese currency (CNY) opened in Shanghai at a relatively strong 7.0535/7.0549 bid/ask range, but later weakened in sympathy with the greenback, down to 7.1040 at 7pm HK time.
As I wrote yesterday, you can’t exactly call it a renminbi-dollar peg, but for all intents and purposes it is.
For the past week, CNY has stayed in a tight 7.05-7.10 range. China is signalling that just as it is not in need of massive monetary easing, neither is it going to attempt to gain advantages by weakening the currency.
One week Shibor (Shanghai Interbank Offered Rate) is well behaved and shows no unusual stress in the system.
The real economic background: After its three-month bout with the coronavirus, China is getting back to work.