Further downside expected in CNY – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 27, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Edinburgh) - Chief Analyst at Danske Bank Allan von Mehren sees the Chinese currency losing further ground in the next periods.

    Key Quotes

    “Given the divergence in monetary policy and the fact that CNY is more market based, we look for a further depreciation of the CNY (and CNH) of around 7% against the USD over the next 12 months”.

    “Market pressure is expected to continue, although China has shown a stronger willingness to defend the currency by draining liquidity in the CNH market leading to higher CNH money market rates making it more expensive to speculate against the CNH”.

    “We still don’t expect a big devaluation of the trade weighted CNY as this would likely back fire and escalate capital outflows”.
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