China has joined in the defense of its economy

The Chinese authorities have begun to take measures to protect the economy and the national currency from the flight of Western investors. The People’s Bank of China (PBOC) raised the dollar/yuan fixed base rate from 7.1768 to 7.1986 (the yuan cannot trade 2% above or below the PBOC’s fixed rate).

The Chinese currency began to weaken against the backdrop of published statistics on the outflow of foreign capital, reduced investment and insufficient growth in production. As a result, China’s state-owned banks were actively selling dollars for yuan in the spot currency markets last week to save the national currency, Reuters reported. In addition, the Commission for the Regulation of the Securities Market announced a number of other measures to support the stock market. These include extending trading hours in the stock and bond markets, stimulating public and large private firms listed on stock exchanges to step up mergers and acquisitions, and reducing brokerage fees.