Shortly after the abrupt Yuan reference rate change was announced, the PBoC made a point to state that this would be a “one-off” depreciation. It is likely the case that the policy authority has no intention of revisiting this method as it backtracks on years of change in policy approach. Furthermore, the exchange rate can quickly turn boon to burden should global commodities prices start to rise once again and further saddle the economy.
As complicated as this tool’s influence is on the system, though, China is not likely to completely abandon it. With a range of levers available to it and without the buffer that open markets offer, the PBoC and other officials will look to implement whatever means they have to fight emergent problems.