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23 Oct 2015
CNY poised to extend the downside – Danske Bank
FXStreet (Edinburgh) - Chief Analyst Allan von Mehren at Danske Bank expects the CNY to keep depreciating in the next months.
Key Quotes
“The main implications of China’s new exchange rate policy are that the link to the USD has weakened and the exchange rate has become more independent”.
“There are no signs that China is aiming for a major competitive devaluation”.
“However, relative monetary policy between China and the US suggests that the CNY will continue to depreciate and we still expect it to depreciate by close to 5% against USD over the next 12M”.
“In the short run however, we expect the PBoC to keep the CNY in a tight grip ahead of the IMF’s decision on SDR. Hence, we only expect it to depreciate slightly on a 1M and 3M horizon”.
Key Quotes
“The main implications of China’s new exchange rate policy are that the link to the USD has weakened and the exchange rate has become more independent”.
“There are no signs that China is aiming for a major competitive devaluation”.
“However, relative monetary policy between China and the US suggests that the CNY will continue to depreciate and we still expect it to depreciate by close to 5% against USD over the next 12M”.
“In the short run however, we expect the PBoC to keep the CNY in a tight grip ahead of the IMF’s decision on SDR. Hence, we only expect it to depreciate slightly on a 1M and 3M horizon”.