It's official: China's central bank was behind the Chinese yuan's recent depreciation.
According to the latest data from the People's Bank of China, the central bank bought about 174 billion yuan worth of dollars in March, a purchase it made to drive down the value of the yuan against the U.S. dollar. Big as that figure is, the amount actually is lower than historical norms. For instance, the PBOC bought, on average, some 230 billion yuan worth of dollars a month last year to hold the yuan down, according to an analysis by Bank of America Merrill Lynch.
But that doesn't mean the Chinese central bank has stepped back from strong intervention in the currency market, as promised in recent months. Rather, it only suggests that the PBOC hasn't been offsetting the rise in the supply of the yuan in the country's financial system that resulted from its dollar-buying intervention.
Normally, the Chinese central bank would do just that: offset its dollar-buying intervention by draining liquidity from the banking system through the sale of government or central bank bills in the open market. So why hasn't it this time?
The PBOC's recent engineering of the depreciation of the yuan was part of a bid to drive out speculators and make the currency more of a two-way bet. The central bank 'hasn't sterilized its intervention in order to make its foreign-exchange intervention more powerful,' said Bank of America analyst Claudio Piron.
The tightly-controlled yuan has weakened 2.8% against the dollar since the beginning of this year -- a rare decline for a currency that has appreciated steadily for most of the past decade. At Thursday's closing, one dollar bought 6.2280 yuan.
But unless it offsets the rise in money supply resulting from the intervention, as it usually does, the PBOC risks higher inflation down the road.
'Unsterilized intervention is not sustainable from a policy perspective as it can lead to inflationary consequences,' Mr. Piron said.
In other words, the yuan might be back on the appreciation track soon, Mr. Piron said.
根据中国央行的最新数据，该行3月份买入了价值约人民币1,740亿元的美元，通过这一买入美元的操作推低人民币兑美元汇率。虽然数额很大，但实际上却低于历史标准。比如，根据美银美林(Bank of America Merrill Lynch)的分析，为抑制人民币汇率，中国央行去年每月平均买入价值约人民币2,300亿元的美元。