Ella 
The July Politburo meeting of the Chinese Communist Party Central Committee was held on Monday.
Lack of aggressive stimulus could prolong yuan weakness
As we expected, the Politburo meeting did not announce any large-scale stimulus measures, likely due to heightened fiscal pressures. The Politburo statement also said it would keep the yuan’s exchange rate basically stable at a “reasonable and balanced level.”
Since late June, the PBOC has continued to set the daily central parity rate at a lower level than market expectations to manage renminbi expectations and volatility, i.e. the midpoint of the USD/CNY trading band is lower than implied by the fixing formula. Still, the market may view the lack of aggressive stimulus as a disappointment, which could prolong the yuan’s weakness.
The yuan is likely to remain under pressure until there is a clear improvement in the economy.
