The People’s Bank of China (PBC) recently asserted that its intervention in the currency market would “basically” end. If this proves to be the case, it would represent a significant change of heart given that the central bank appears to have accumulated large amounts of reserves in recent months. We suspect it is more a case of aspiration than reality. But even if we are wrong to be sceptical, we doubt such a shift in policy would pose a major threat to Treasuries.
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