The latest move by the People´s Bank of China (PBoC) to devalue the Renminbi (RMB) by almost 2% remarks the biggest daily deprecation since 1994. While surprised by many investors, the exchange rate reforms are complementary with ongoing capital account liberalization measures. However, from this perspective, the RMB exchange rate will be more market-oriented going forward, and the volatility of the RMB – both in the onshore (CNY) and in the offshore (CNH) FX rate – will pick up in the current market conditions.
