Over the weekend, the top brass at China’s central bank Yi Gang (PBOC Governor) and Guo Shuqing (PBOC Communist Party Chief) were suddenly removed from their posts after having been reappointed by President Xi Jinping less than four months ago. Meanwhile, PBOC Deputy Governor Pan Gongsheng has been elevated to the role of Party Secretary at PBOC, and is also expected to be named Governor of the PBOC shortly. Pan is also currently the Director of SAFE (State Administration of Foreign Exchange) - the foremost currency management body which oversees China’s massive $3 trillion in foreign exchange reserves.
The consensus narrative out of financial media on this major development has been that “Pan is a continuity candidate,” providing stability in a time of escalating economic risk (which, as Weston Nakamura points out, is an absurd takeaway in itself). However, according to Weston Nakamura, what the policy stimulus preferences of the newly appointed leadership is not what key headline is - rather, this is part of a bigger effort from China as of late - to somehow stem the sharply declining yuan.
In light of the outright failure from broader financial media to properly inform and analyze a major central bank reshuffling its top level officials in the midst of market and economic turmoil, Weston Nakamura presents a deep-dive explanation and analysis on what is currently underway, namely:
Pan Gongsheng has been elevated with great urgency to the very top of China’s central bank for one reason only - to defend the yuan as it approaches a 15-year breakdown level.
This is a must-watch/listen, and share episode of Market Depth.
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