China: Officials continued to squeeze liquidity in the offshore yuan market (CNH) - BBH

Analysts at BBH note that the Chinese officials have continued to squeeze liquidity in the offshore yuan market (CNH), and some reports suggest that state-owned enterprises were encouraged to sell foreign exchange holdings. 

Key Quotes

“In addition to more formal and informal capital controls, Chinese officials triggered a short squeeze that has been painful enough to likely deter aggressive sales in the near-term. In these two days, as the overnight deposit rate for yuan in Hong Kong rose to 80% and the three-month deposit rate jumped 100 bp, the CNH has rallied nearly 1.9% and on the onshore yuan (CNY) has gained 1.1%.”