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CNY expected to drop further – Danske Bank

FXStreet (Edinburgh) - Analysts at Danske Bank see the Chinese currency losing further ground in the next weeks.

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 dependent on growth and monetary policy in China”.

“In our view, China is not 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 expect it to depreciate by close to 5% against USD in 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 this autumn. Hence, we only expect it to depreciate slightly on a 1M and 3M horizon”.

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