Interesting idea from the above article: ""We have a direct position in the (yuan) but it's much easier to trade second-round effects of China," said Mark Farrington, portfolio manager with Macro Currency Group in London. "The Korean won, Malaysia, Taiwan, are all easier plays." .
Article about some missing data relating to capital outflows http://www.zerohedge.com/news/2016-...ts-key-data-showing-size-its-capital-outflows .
twitter dot com/zerohedge/status/701940214558810112 "CHINA SETS YUAN CENTRAL PARITY AT 6.5273 TUES VS 6.5165." 5:22 PM - 22 Feb 2016 (8.22pm ET) Following this, announcement (possibly at 8.15pm ET), USD/CNH went from 6.5268 (at 8.14pm ET) to 6.5379 at 8.45pm ET .
China FX reserves chart and data: http://www.tradingeconomics.com/china/foreign-exchange-reserves "Foreign exchange reserves in China declined to 3,166.82 USD billion in September from 3,185.17 USD billion in August of 2016, data from the country's central bank showed. It is the smallest figure since May 2011 and below market consensus of 3,180 USD billion. " .
http://www.bloomberg.com/news/artic...hange-reserves-shrink-as-yuan-pressures-build 7 October 2016 China’s foreign-exchange reserves declined more than expected in September, amid speculation the central bank resumed selling dollars to support the yuan. "The stockpile shrank to $3.17 trillion last month, the People’s Bank of China said in a statement Friday. That’s the lowest since April 2011 and below the median estimate of $3.18 trillion in a Bloomberg survey of economists. The decline is a reflection of both currency intervention and capital outflows, according to Zhao Yang, Nomura Holdings Inc.’s chief China economist." http://blogs.barrons.com/asiastocks...nce-may-as-pboc-sells-dollar-to-support-yuan/ 6 October 2016 China’s foreign exchange reserves have fallen for the third straight month. China’s FX reserves came in at $3.17 trillion at the end of September, down $19 billion from a month ago, the largest decline since May. The street had expected FX reserves to stay at $3.18 trillion. The offshore yuan fell to 6.7182 per dollar earlier this morning, a new 9-month low, amid worries over the British pound’s 6% flash crash. The offshore yuan stabilized to 6.7144 recently. “The renminbi has held fairly steady against the dollar in recent months. But, as today’s data highlight, this is only because the PBOC has continued to intervene heavily in the FX markets in response to still large capital outflows,” wrote Capital Economics‘ Julian Evans-Pritchard. He explained his reasoning: Our model suggests that fluctuations in exchange rates and global bond prices should have increased the dollar value of the reserves by around $8bn. This implies that the People’s Bank (PBOC) probably sold around $27bn in foreign exchange last month, with the pace of sales largely unchanged since July when the PBOC stepped up intervention in response to post-Brexit volatility. Given that we don’t expect a major change in the current account surplus in September, this suggests that capital outflows remained broadly stable last month at around $40bn. .
The Dollar - Yuan is self stabilising, I don't think China has anything to worry about if reserves drop below $1T because by that point the US financial system would be drowning. Of course, that means that the US has something to worry about if China liquidate another $2T in reserves.