China onshore liquidity tightens due to PBoC’s intervention

PBoC set USD-CNY fixing rate at 6.3864 this morning, compared with yesterday's closing rate at 6.3891. In general, CNY remained quite stable this week, which suggests that China's central bank could have sold USD to safeguard the exchange rate. 

In the meantime, the onshore CNY liquidity conditions show tightening bias as the intervention drained CNY from the market. 

Separately, China's Caixin preliminary PMI dropped to 47.1 in August, the lowest since February 2009, down from 47.8 previously. The drop of PMI is largely due to sluggish domestic manufacturing activities, slumping commodity prices and weak exports, says Commerzbank.