Westpac Banking Corp and Sean Callow

foreign exchange: According to a Bloomberg Business report, the offshore yuan on Monday halted its drop "after China stepped up verbal defense of its currency to ward off speculators betting on depreciation." Sean Callow, a foreign exchange strategist at Westpac Banking Corp in Sydney, told Bloomberg that the commentary was a "very clear message to speculators." "There could be some further tweaking of limits on capital flows, but in the short term the main tools are likely to be steady fixings plus intervention," said Callow while predicting the next moves by the Chinese government, according to Xinhua China. During last week World Economic Forum in Davos, Switzerland, some economists spread pessimistic views about the Chinese and global economy, while some financial magnates such as George Soros claimed that they were betting against Asian currencies, triggering worries about intensified short selling on the Chinese yuan and the Hong Kong dollar. Citing the recent engagement between the Chinese monetary authority and some "radical speculators" over the yuan value, the Xinhua article, titled "Chinese economic transition testing global investors' wisdom, courage," warned that those betting on the "ultimate failure" of the Chinese economy and capital market could face huge losses and potential legal consequences. Simon Wang, finance director at the China-based Guoyuan Securities, told the Wall Street Journal that the Xinhua commentary indicated that "restoring market stability has escalated to a matter of national will." Ken Chueng, a strategist with the Mizuho Bank Ltd headquartered in Japan, said in an interview with Bloomberg that "China won't tolerate sharper yuan declines," which could cause capital outflows, trigger a currency war and hamper the internationalization process of the yuan. According to the finance editor of Business Insider, the Xinhua commentary is more like a promise than a threat. "China is not kidding about what it can do with traders," the editor wrote. "Yuan shorts, you've been warned. With the Chinese government firm in its stance to stabilize both the currency value and the domestic capital market, yuan shorters seem to be fighting a harsh battle with no hope of winning, a number of experts have noted. (news.financializer.com). As reported in the news.