Panorama: RMB depreciation - What are the implications for Chinese corporates?
The potential depreciation of the renminbi (RMB), along with the implementation of capital flow measures, are longstanding concerns for China. More recently, the country’s new monetary policy stance of being “prudent and neutral”, announced at the beginning of the year, and reiterated during the National People’s Congress, has been attracting attention. This Focus aims to provide some insight into these three aspects and examine their implications for Chinese corporates.
On Aug 11, 2015, the People’s Bank of China (PBoC) released a statement on “Improving the quotation mechanism of central parity between the renminbi (RMB) against the US dollar (USD)”, while simultaneously setting the onshore RMB fixing rate 1.8% weaker against the USD. This triggered expectations of a depreciation of the RMB.