China Hits 'Inflow' Panic Button- Strengthens Yuan Fixing By Most In 4 Years

The PBOC strengthened the CNY fixing by over 0.3% today - its biggest fixing move since June 2010 as the Yuan strengthens to 6-month highs against the USD. This seeming 'panic' move comes on the heels of last night's record trade surplus - which as Goldman notes - was likely dominated by FX inflows thanks to over-invoicing. It is unclear the reasoning for the move in the CNY fixing but one wonders if, with industrial commodities continuing to plunge (CCFD collateral value dropping) and now PMIs rolling over, if further over-invoicing is being anticipated as cover for a notable slowdown in growth. One thing is clear - after today's surge in the USD and decoupling with US stocks, something is changing.

CNYUSD falls to 6-month lows (CNY strongest vs USD in 6 months)...

 

Seems the big jump in the fix was catching down to CNYUSD market movements (inflows following the SPL QE-lite news)...

 

According to Bloomberg, one trader noted,

CNYUSD selling to an intraday low at 6.1326 is led by leveraged investors, according to FX trader based in Asia.

 

the PBOC could be sending a “message” about yuan stability amid broader market volatility.

Charts: Bloomberg