Photo: 
Imaginechina
Power in reserve: China’s yuan battle

A $3.5 trillion insurance policy should cover almost every emergency. But some investors worry that China’s vast foreign-exchange reserves, the world’s biggest stash, are too small to offset the outflow of cash as growth falters. In August, after a mini-devaluation, companies and investors took fright, dumping the yuan; China drew down a record $94 billion to prop it up. But data today showed that China used less than half that, or $43 billion, in September. Another big depletion would have put it under pressure to let the currency weaken further, rather than burn through more. China's fight is not over yet. It has tightened capital controls, making it harder to take money out. The central bank is timing its interventions in currency markets cannily, getting more bang for its bucks. With such tactics, its huge reserves should prove ample for defending the yuan. Defending China’s reputation is another story.

Oct 7th 2015
Continue reading today's edition
Download the app here. Five stories, six days a week, straight to your iPhone or Android smartphone.
Sign up to our newsletter
Receive Espresso via e-mail. Digital subscribers can sign up for daily delivery of Espresso direct to their inbox.