The People’s Bank of China (PBoC) intervened in the foreign exchange market on Friday to prop up the renminbi after it hit a 16-year low against the US dollar.
The PBoC set the midpoint rate for the renminbi at 6.7942 per dollar, down from 6.7628 on Thursday. The central bank also reportedly bought yuan in the offshore market.
The renminbi has been under pressure in recent months due to a number of factors, including the US-China trade war and the recent COVID-19 outbreak in China.
The PBoC’s intervention is an attempt to prevent the renminbi from depreciating too quickly, which could hurt China’s exporters. However, it is unclear how long the central bank will be able to prop up the currency.
The depreciation of the renminbi has raised concerns about the health of China’s economy. However, some analysts believe that the depreciation is a necessary adjustment after years of the currency being artificially undervalued.
Only time will tell how the renminbi will fare in the long run. However, the PBoC’s intervention on Friday is a sign that the central bank is willing to take steps to prevent the currency from depreciating too quickly.
