China spent roughly $32bn in foreign exchange reserves to strengthen the renminbi in October, its heaviest monthly intervention in nearly two years in the latest sign of Beijing’s nervousness about the economy.
The data released on Wednesday eased worries that Beijing intended to deploy exchange-rate devaluation as a weapon in its trade war with the US. But it also highlights the dilemma facing China’s central bank as it seeks currency stability without draining reserves.
Some analysts believe authorities do not want the currency to weaken beyond Rmb7.0 per dollar, which some view as a psychological threshold. The onshore renminbi closed at Rmb6.93 to the dollar on Wednesday.
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