What Is Driving Offshore RMB Volatility?

What role does Hong Kong Liquidity  playing in the recent Offshore RMB Volatility

Recent bouts of higher CNH funding costs and sharp moves lower in USDCNH have raised questions as to whether Chinese authorities are deliberately strengthening the yuan. A new report from UBS’s global macro strategy team suggests while the market believes this is the case, suspected actions by the People’s Bank of China may not actually be a new policy, and the strengthening is something that has been taking place for some time.

Trying figure out how an opaque central bank is trying to influence the market, is not an exact science. The relatively infrequent communication with the market by the PBoC means that Wall Street analysts...