Rise in dollar trouble for yuan

According to The Wall Street Journal, the Chinese central bank is now coming under renewed pressure to steady the yuan and prevent money from leaving China’s shores – the culprit is the dollar. Since the end of April, the yuan has depreciated 0.6% against the dollar, eroding the 1% gain the Chinese currency made over the previous two months. The yuan’s renewed weakness puts the PBOC back in a familiar juggling act: Its mandate to support growth requires it to pump credit into the economy, which tends to weaken the yuan. But it must make sure it doesn’t weaken the currency so much that it worsens the flood of money exiting China.