§
Since PBOC used a new methodology
to fix its USDCNY mid-point, CNY has clocked an approximate
3.4% depreciation from its close of 6.2097 on 10 Aug. PBOC
has started to intervene to prevent a panic sell off in the CNY market. We
continue to expect further weakness in the CNY towards
6.50 by end 3Q.
§
The recent devaluation in the
yuan and a more market-determined yuan should see an increase in the degree
of monetary accommodation and concomitant support for the domestic economy.
Although PBOC stated that the yuan devaluation is not meant to promote
exports, a cheaper yuan is likely to lessen the pressure that exporters face.
We estimate that a 1% fall in the CNY REER could boost exports by 2.3%.
§
USDCNY could reach 6.50 by 3Q,
taking into account the upcoming rate hike from the US Federal Reserve and
that could mean a total of 4% depreciation from around 6.20 seen on 10 Aug.
Our estimates show that most Asian currencies are sensitive to CNY
fluctuations and the switch to a new FX regime requires us to revise our
forecasts.
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.