China NDFs weaken sharply on devaluation jitters

The price of Chinese renminbi non-deliverable forwards (NDFs) spiked sharply against the dollar in active trading this week, following a cut in interest rates by the People's Bank of China (PBOC) last week and fears that China would be unable to avoid participating in a round of global currency devaluations, traders and economists said on Tuesday.

"The PBOC set the dollar/renminbi fix at 6.8527 [Tuesday morning] after 6.8505 yesterday," said Patrick Bennett, an economist at Société Générale in Hong Kong, in a daily report. China's central bank allows the domestic currency, which is not fully convertible, to trade within a narrow band each day. The PBOC cut its one-year lending rate by 108 basis points to 5.58% and the deposit rate by the same amount to 2.52% on November 25. The central bank has cut lending rates four times since September

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