CNY still appears overvalued - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the Chinese FX policy is comfortingly predictable, for now at any rate as the CNY has appreciated substantially in real terms against very other major currency over the last decade, and still appears almost as overvalued as the Mexican peso and South African rand are undervalued.

Key Quotes

“Falling FX reserves surely provide some cover against accusations of FX manipulation (cover against accusations of pushing the currency down, at any rate), and the authorities appear keen to keep on weakening the currency for as long as they can. This continues to provide no help at all for the Asia currency bloc as a whole, even if it does just quietly add to the upward pressure on the dollar’s trade-weighted value, along with the softness of the Peso and Canadian dollar.”