PBOC officials said to have quietly moved back to stability as primary goal for currency policy, dropping the more market based mechanism - financial press (UPDATE)
- sources say that at closed door meetings in early January, the PBOC dropped its scheme for a more market based mechanism for currency and went back to a policy of maintaining stability as its primary goal. The policy flip flop has not been formally announced but officials have gone back to the prior way of making daily adjustments in the yuan value based on officials' judgment rather than any market based metric.
- the decision not to announce the policy reversal is said to be based on concerns about capital flight and spillover effects if China is perceived as weakening its currency to support exports. A weaker currency could also make debt servicing more difficult for Chinese firms with large dollar denominated debts.