Albert Edwards: China faces imminent sell-off if FX free-fall continues

FX reserves approaching IMF danger level

China could face a "tidal wave" of speculative selling in the coming months if its FX reserves continue to fall, according to Société Générale strategist Albert Edwards.

The country has spent $800bn of its reserves since they peaked at $4trn in mid-2014, closing in on the International Monetary Fund's (IMF) recommended lower boundary of $2.8trn. Edwards said China's reserves could fall below that level from the current total of $3.2trn in "the next few months", and the People's Bank of China (PBoC) could be forced to free-float the remnimbi, allowing markets to decide the currency's exchange rate. The global strategist said: "We are then a few months from the $2.8trn level that the IMF believes is the lowest acceptable level. "Approaching and breac...