SHANGHAI: China has advised traders against shorting the yuan, after a recent slide took the currency to the brink of the critical seven per dollar level.
Guo Shuqing, head of China’s banking and insurance regulator, said in a speech that speculators “shorting the yuan will inevitably suffer from a huge loss.”
The speech, delivered by a spokesman for the agency on Saturday in Beijing, also included comments on the trade war, making Guo the highest level financial official to publicly comment on the issue since tensions between China and the US escalated this month. Most local media ran front-page articles on the speech.
The broadside comes as bearish sentiment on China’s currency ratchets up, thanks to trade tensions and signs of a stuttering economy.
The offshore yuan, which briefly strengthened yesterday past 6.9 per dollar for the first time in eight days, had weakened about 2.6% this month. A gauge of traders’ willingness to bet on further declines has surged to the highest level among Asian currencies.— Bloomberg
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