Deutsche Bank say that world central banks should start planning coordinated intervention to support the Chinese yuan.

A la the Plaza Accord of 1985.

OK, time for all the old traders to start reminiscing. And a history lesson for everyone else. I'm gonna have to excuse myself from recalling the good old days, it was slightly before my time.

  • In 1985, the Fed, Bundesbank, Bank of Japan, Bank of England (and others) joined together in the Plaza Accord to drive down the US dollar's value. 'Plaza' Accord 'cause government and central bank representatives met in the Plaza Hotel in New York.
  • The accord was reached on Sunday, 22 September 1985
  • Selling (of the USD) commenced on Monday morning in New Zealand time ... Bloodbath it was :-D

Deutsche Bank reckon a similar accord is needed now to support the yuan and keep the dollar from strengthening more:

"It is not too early for the U.S. and other major global players to consider how best they can support China in a transition to a market determined exchange rate," Alan Ruskin, New York-based global co-head of foreign-exchange research at Deutsche Bank ...

Joint currency interventions helped stem the previous two dollar strengthening periods since the 1980s, and "it is quite likely that similar actions will be needed in this big USD cycle," he wrote.

Bloomberg with more