Why investors need to remain mindful of a more flexible renminbi regime

Ooi Boon Peng, chief investment officer, fixed income at Eastspring Investments, looks at how last month's devaluation of the renminbi is spilling over into other Asian bond markets

On 11 August, the People's Bank of China (PBoC) surprised the market with a devaluation of the renminbi by raising the currency fixing rate.  On 12 and 13 August, PBoC raised the renminbi fixing rate again, weakening the renminbi by another 1.6% and 1.1% on the respective days against the dollar. The moves were in line with the central bank's announcement that it would adopt a more market-driven exchange rate mechanism by allowing the fixing rate to be determined by factoring in the closing level of the spot exchange rate of the previous trading day. There has been much market spec...