China's FX intervention unlikely to sustain

The Chinese authorities may have bought some time by implementing macroprudential measures to make it more costly and difficult for domestic entities to buy USD, but the efficacy of such measures will likely fade over time while currency overvaluation and weaker growth will maintain the pressure for capital outflows. As such, while macroprudential measures may result in reduced outflows in the short term.

Considering the concerted effort by the authorities to slow the slide in the CNY, especially via macroprudential measures, as well as the pressure from the G20 to avoid currency devaluation and global market instability, there are clear risks to the year-end USDCNY forecast of 6.80, says Barclays. 

"We continue to believe the policy is unsustainable as money will continue to leak out of the country's porous capital account. Similarly, FX intervention will not be sustained, given the associated costs in terms of FX reserves depletion and liquidity imbalances", argues Barclays.