After yet another interest-rate hike by the US Fed, and with more to come, China’s central bank is looking to prevent a rapid depreciation of the yuan as the economy remains under considerable pressure.
Unlike previous episodes of sudden stops and reversals, the recent volume of outflows is much higher, and could accentuate financial vulnerabilities while worsening overall macroeconomic instability.
After suffering an ‘unprecedented’ sell-off in late February due to the impact from Russia’s invasion of Ukraine, China saw US$2.7 billion of net funds flowing into Chinese equities in May, according to a new report.