China’s central bank is caught in a pickle between the falling yuan and sputtering economic growth

China’s central bank is caught in a pickle between trying to prop up the falling yuan while also boosting an economy that’s losing momentum.

A key dilemma the People’s Bank of China faces is that its main lever for juicing growth — rate cuts — can also put more downward pressure on the yuan, which has fallen by 5% against the dollar this year.

Central bankers appear to be attempting to have it both ways by stepping up verbal intervention on the yuan while its market intervention lowers rates.

On Wednesday, the central bank-backed publication Financial News ran a commentary that said the PBOC has sufficient methods for stabilizing currency markets even if the yuan crashes in a “panic.”

Source: Business Insider