5 Jan 2016
CNY: how weak will it get? - Deutsche Bank
FXStreet (Guatemala) - Analysts at Deutsche Bank explained that their central view is that some of ‘the novelty’ of a weaker Rmb is already wearing thin (as we already saw in December) and the impact on global asset market will be much reduced from Aug/Sep 2015.
Key Quotes:
"Similarly, other currencies beta to CNY should be much lower than after the August surprise. In addition, the window for Rmb weakness should be concentrated in H1 2016.
The closer we get to the Hangzhou G20 meeting, the less volatility is likely to be tolerated, while the Rmb’s inclusion in the SDR at the start of Q4 will be another factor quashing H2 vol. This all assumes no China real economy hard landing"
Key Quotes:
"Similarly, other currencies beta to CNY should be much lower than after the August surprise. In addition, the window for Rmb weakness should be concentrated in H1 2016.
The closer we get to the Hangzhou G20 meeting, the less volatility is likely to be tolerated, while the Rmb’s inclusion in the SDR at the start of Q4 will be another factor quashing H2 vol. This all assumes no China real economy hard landing"