When the People’s Bank of China speaks — people listen.
That sigh of relief which swept over world financial markets overnight is based on a terse statement from the PBOC:
“Adjustment to close the gap between the central parity rate and the actual trading rate of China’s currency, the renminbi (RMB) or yuan, is basically complete,” a central bank official was quoted as saying by People’s Daily Online at a rare PBOC press conference on Thursday.
“The yuan’s tumble eased as China’s central bank signaled support for the currency, calming investors after a shock devaluation on Tuesday rattled global markets,” trumpeted Bloomberg.
“A pledge by Beijing to keep the Chinese renminbi stable has helped salve market nerves, supporting global bourses and emerging market currencies, while reducing demand for supposed havens such as Treasuries and gold,” said the Financial Times.
Hey! Wait and minute! Isn’t this the same Chinese central bank that western pundits skewered for triggering a stock market rout through inept monetary policies? The gang that couldn’t shoot straight whose emergency market measures were being ignored by brokers and investors?
Asia Unhedged has noted the PBOC’s past blunders in coordinating monetary policy. But it’s a bit amusing that when big hiccups like the yuan surface and Chinese regulators do the right thing — the media tone suddenly changes.
Used to be that folks listened to (now-defunct) Smith Barney and Warren Buffett. It’s more than a geopolitical cliche to say that times have changed.