Is it time to end the RMB midpoint fixes?

SINGAPORE (Jan 5): In the past two weeks, the People’s Bank of China’s (PBOC) daily USD-RMB midpoint fix has underestimated foreign exchange movements.

The midpoint fix dictates where the RMB can trade with other currencies, within a 2% range.

In fact, Citi Research’s analyst Siddharth Mathur notes that the deviation has been far more significant and has occurred more consistently than in previous episodes of USD strength. “This episode more than offsets the mid-November period, during which the fixings had responded more forcefully than expected to USD strength,” said Mathur.

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