The PBOC Is in a Difficult Dilemma

The PBOC knows that if the yuan is weak, when the economic fundamentals are weak, a weaker currency is going to help the economy. A very weak yuan means that we are going to see financial instability because it will prevent foreign investors from buying Chinese assets. So in this dilemma, PBOC has to strike a balance of keeping the yuan weak, but not so weak, that's going to trigger any sort of panic.