Insights

The People's Bank of China (PBOC) announced the long-expected widening of the USD/CNY daily trading band to +/- 1percent from +/- 0.5 percent effective on April 16.  This move is a significant step towards a more freely traded RMB.  Though history indicates that USD/CNY would probably not trade at the new maximum trading band, widening the trading band will allow the USD/CNY exchange rates to be determined more by market forces creating rate fluctuations.  This aligns with China's goal of capital account liberalization and gradual loosening of FX policy.  To have a freely traded CNY market, China's financial system needs to live with higher CNY volatility, trading along with market forces as its trading partners.

Leverage can be a powerful tool, but optimizing its application requires some calculus of cost versus benefit. Adding term debt or a revolving credit facility can lift a transaction size or working-capital liquidity beyond what precious equity capital can achieve alone. Finding that perfect, simple leverage tool is critical to a company's growth and future success. So, how can a CFO make the best decisions about debt for the business?

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The Economic Booklet is our reference tool for clients. Displaying graph and chart views of the global economy, this piece guides clients through factors that impact their business. This is our third edition of the Economic Booklet, and we will continue to update these views on a quarterly basis.