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24 Feb 2015
USD/CNY could head towards 6.32 in mid-year – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan see the Chinese currency depreciating further around the mid-year.
Key Quotes
“USD/CNY is now trading at the strong side of the bands, but driven by a greater range of factors than just recent PBoC guidance via the fix”.
“These influences include PBoC easing, broad USD strength and rising short and long-term capital outflows”.
“The central scenario is for some weakening to reinforce the notion of two-way risk around the currency, but without the sort of devaluation some think necessary to stimulate growth or reverse a decade-long 40% appreciation of China's real effective exchange rate”.
“That sort of adjustment would always be awkward internationally for a large country, particularly one running a record trade surplus of $60bn per month. We're positioning for modest renminbi weakness (mid-year target of 6.32)”.
Key Quotes
“USD/CNY is now trading at the strong side of the bands, but driven by a greater range of factors than just recent PBoC guidance via the fix”.
“These influences include PBoC easing, broad USD strength and rising short and long-term capital outflows”.
“The central scenario is for some weakening to reinforce the notion of two-way risk around the currency, but without the sort of devaluation some think necessary to stimulate growth or reverse a decade-long 40% appreciation of China's real effective exchange rate”.
“That sort of adjustment would always be awkward internationally for a large country, particularly one running a record trade surplus of $60bn per month. We're positioning for modest renminbi weakness (mid-year target of 6.32)”.