USD/CNY rate was fixed at 6.3867 by PBoC yesterday, this is the highest since August ending, which is an upside surprise to the market. This higher rate drove sell-off flows in CNY and CNH and the spread between both widened to 400pips from 340 of last Friday.

Since August 11, the average spread is 350 pips, when the central bank announced 'one-off devaluation', which suggested that offshore investors are more on a negative outlook about China's growth outlook.

It seems that Chinese authorities prefer a managed float of the exchange rate. PBoC will seek to calm the markets when volatility reaches heights.

Chinese central bank intervened in the FX forwards and swap markets, other than direct USD selling in the spot market, over the past month. This suggests that Chinese authorities tried all means to hit on the market anticipations of the currencies fast depreciation.

"Before the SDR decision on 30 November, we believe that Chinese authorities will cap USD-CNY at 6.40 and USD-CNH at roughly 6.45", estimates Commerzbank.