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21 Aug 2015
China's trading partner currencies to fall - Rabobank
FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank explained that it is their view that the value of the CNY will continue to weaken vs. the USD in the coming months.
Key Quotes:
"By maintaining a de facto USD peg, China had been allowing its effective exchange rate to strengthen over the past year. The USD started to trend higher in H2 2014 as the market started to look ahead to the first Fed rate hike of the cycle. Consequently, China has been importing some monetary tightening via its currency which brought disinflationary pressures – the latest PPI inflation print for China stood at -5.4% y/y.:
"A weaker currency would seem more appropriate for a country suffering from slowing growth and disinflation and we are forecasting a move to USD/CNY6.70 on a 12 mth view."
"On the assumption that the CNY continues to weaken, there is heightened risk that the currencies of many of China’s trading partners will come under further pressure."
Key Quotes:
"By maintaining a de facto USD peg, China had been allowing its effective exchange rate to strengthen over the past year. The USD started to trend higher in H2 2014 as the market started to look ahead to the first Fed rate hike of the cycle. Consequently, China has been importing some monetary tightening via its currency which brought disinflationary pressures – the latest PPI inflation print for China stood at -5.4% y/y.:
"A weaker currency would seem more appropriate for a country suffering from slowing growth and disinflation and we are forecasting a move to USD/CNY6.70 on a 12 mth view."
"On the assumption that the CNY continues to weaken, there is heightened risk that the currencies of many of China’s trading partners will come under further pressure."