Forex Flash. China continues shuffle towards full FX convertibility - BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that China’s State Council said it will unveil an operational plan this year to make the currency fully convertible on the capital account.

Further, they add that It will also create a mechanism for outbound investment by individual investors, adding “We shall see.” They continue, noting that the Chinese are certainly moving in this direction, but the timeline will be the key here. They write. “We expect a very slow and steady approach to FX liberalization rather than any sort of “Big Bang.” PBOC continues to fix USD/CNY lower, today hitting another cycle low of 6.1925. The yuan has appreciated 1.6% YTD and 1.3% QTD against the US dollar, which is more than we expected. While it has not a very large move in the world of foreign exchange, we suspect that officials will seek to engineer a more stable tone in the coming weeks.”