Asian Central Banks: Working Hard To Stave Off Dollar Depreciation?

Last week the Chinese government announced their intention to allow the renminbi to float within a widening zone, as opposed to implementing more discrete revaluations as they did in July.  Monday brought this clarification:

China's central bank chief Zhou Xiaochuan has said that the bank will not initiate any moves in the management of its considerable foreign exchange reserves that would trigger market volatility.

In remarks posted on the central bank's website, Zhou said the People's Bank of China will not take any actions adjusting the composition of its hard currency holdings, suggesting that fears in the market that China may sell down some of its US dollars are unfounded.

Thus the prompt for Brad Setser to note that merely reducing the rate of dollar accumulation may be enough "trigger market volatility", and to plead "show me China's reserve."  That information would be useful, because it may give us some notion of how hard the Chinese central bank is working to maintain the current narrow peg.  Today we get a clue from the Reserve Bank of India, via the Business Standard:

The Reserve Bank of India turned a net buyer of dollars in July, the first time this fiscal. The RBI bought $2.473 billion that month, according to the central bank’s bulletin released on Wednesday. Most of these purchases were made after the revaluation of the Chinese yuan was announced, currency dealers said.

“We believe that the entire buying would have been after July 21, when the yuan revaluation was announced,” a senior dealer at a US bank here said. “They (RBI) had not been buying before that and whatever demand was there it was genuine corporate demand.”...

The rupee, which had been moving around Rs 43.50 per $1 before the yuan revaluation, rose to a 6-year high of Rs 43.15 per $1 following the surprise announcement. But the rupee gave up its gains over the next few days because of continued dollar buying by the RBI through some state-owned banks...

According to dealers, central banks across Asia had intervened to prevent a sharp appreciation in their currencies. South Korea, Malaysia, and Turkey also resorted to dollar purchases.

Worth watching.