PBoC steps up yuan ‘stress test’

HONG KONG: China cut the yuan’s reference rate to the weakest since 2011, fueling speculation that the central bank is trying to release pent-up depreciation pressure before an expected increase in US interest rates.

There are signs that the People’s Bank of China (PBOC) has started guiding the yuan lower before the Federal Reserve acts next week, according to Bloomberg Intelligence economists Tom Orlik and Fielding Chen. The authorities are conducting a “stress test” in the currency market before the Fed moves, Zhou Hao, a Singapore-based senior economist at Commerzbank AG, said in an interview on Tuesday.