Sean Callow, Research Analyst at Westpac, notes that since Yellen’s July 2015 testimony, CNY has fallen 5.6% against the US dollar, more than say KRW or SGD but less than e.g. INR and MYR, while JPY and EUR have risen against the dollar. Key Quotes “But it is the renmimbi which is causing angst at the Fed. Yellen asserted that “declines in the foreign exchange value of the renminbi have intensified uncertainty about China’s exchange rate policy and the prospects for its economy”. This will only intensify the focus on USD/CNY when it reopens on Monday after a week-long holiday. Yet as the near-$100bn fall in China’s Jan FX reserves suggests, the central bank has worked hard to stabilize USD/CNY since mid-Jan. The pair’s one month realized volatility had already fallen below 2% ahead of lunar new year. This is a low since mid-Dec 2015, when of course the FOMC decided that the outlook was rosy enough to warrant a hike in the funds rate. We expect the yuan to be kept on a short leash near term. The longer this is the case, the less cause Janet Yellen and her colleagues will have to blame the renminbi for their worries over the global economy.” For more information, read our latest forex news.