CNY expected to remain under pressure – Rabobank

Strategist at Rabobank Michael Every has assessed the prospects for the Chinese currency against the backdrop of potential moves from the Fed.

Key Quotes

“It seems likely CNY stability will soon be rocked once again”.

“On 1 June the PBOC notably set daily fixing at 6.5889, the weakest since February 2011, and the near-term question must be how long we have to wait until we break through the psychological 6.60 level”.

“Arguably we would have done so already if CNY/CNH were freely traded. However, the recent pattern of positive news for USD, followed by CNY fixed weaker, yet onshore and offshore currencies subsequently trading either stronger than fixing or in a very narrow range, when technically they could move far lower and still be within the +/-2% band, allowed says they are not moving freely”.

“Nonetheless, with problems on many fronts China may soon find its currency the path of least resistance”.