China's Yuan Woes Get Worse

In the first week of 2017, the offshore yuan surged by a record amount against the U.S. dollar over two days, interbank borrowing costs soared and volatility intensified. The following week, pretty much everything reversed. It's a familiar pattern that exemplifies the contradictions bedeviling China's currency.

Policy makers have expended much effort trying to internationalize the yuan, notably by pushing the International Monetary Fund to include it in its Special Drawing Rights basket. They also want to control the yuan's value, fearing that a freely floating currency would destabilize the financial system.