12 Aug 2015
Door open for a weaker CNY? – Societe Generale
FXStreet (Edinburgh) - In the opinion of Kit Juckes, Strategist at Societe Generale, the Chinese currency could depreciate further in the next weeks.
Key Quotes
“The Chinese renminbi has now fallen by 3.6% since the end of last week against the US dollar. We’re not much wiser than we were about how far the Chinese authorities will let the currency fall (much closer to USD/CNY 7 in due course is an opening guess) but after letting it weaken again today the PBOC has been seen intervening to calm the market (a bit)”.
“The release of very weak industrial production data for July (+6% y/y, vs. 6.8% last and 6.6% expected), demonstrates the need for simulative policy action but it also guarantees a continued knock-on to the rest of the world”.
“Within Asian ‘emerging’ currencies, the Taiwan dollar and the Korean won are most directly affected by trade links, but the New Zealand Australian dollars will remain under pressure and may well eventually both fall by more than the CNY”.
Key Quotes
“The Chinese renminbi has now fallen by 3.6% since the end of last week against the US dollar. We’re not much wiser than we were about how far the Chinese authorities will let the currency fall (much closer to USD/CNY 7 in due course is an opening guess) but after letting it weaken again today the PBOC has been seen intervening to calm the market (a bit)”.
“The release of very weak industrial production data for July (+6% y/y, vs. 6.8% last and 6.6% expected), demonstrates the need for simulative policy action but it also guarantees a continued knock-on to the rest of the world”.
“Within Asian ‘emerging’ currencies, the Taiwan dollar and the Korean won are most directly affected by trade links, but the New Zealand Australian dollars will remain under pressure and may well eventually both fall by more than the CNY”.