21 Mar 2014
CNY seen weakening towards 6.30 by end-year - Rabobank
FXStreet (Barcelona) - Michael Every, Head of Financial Markets Research, Asia Pacific, at Rabobank, expects the USD/CNY to reach 6.30 by year-end as the Chinese economy slows down.
Key Quotes
"Our revised USD/CNY forecast still retains a medium-term outlook towards depreciation (recall in a previous Special we argued that CNY was around 15% overvalued at the 6.05 level)."
"However, the previous target we had for year-end has already been exceeded even as there appears much further slowing for the economy to do; consequently CNY is seen weakening towards 6.30 by end-year – though we stress the journey is unlikely to be a straight line, with periodic volatility to be expected; indeed, that target might briefly be exceed near-term as derivative exposures are unwound (that means an ‘N’ shape trajectory rather than our previous view of a ‘V’). "
"Moreover, the overall end-2014 USD/CNY level fundamentally depends on which of the possible slowdown scenarios we see (though we stress again that we are increasingly certain it is a slowdown of some sort that we will see) – and that is ultimately a political, not an economic, choice."
Key Quotes
"Our revised USD/CNY forecast still retains a medium-term outlook towards depreciation (recall in a previous Special we argued that CNY was around 15% overvalued at the 6.05 level)."
"However, the previous target we had for year-end has already been exceeded even as there appears much further slowing for the economy to do; consequently CNY is seen weakening towards 6.30 by end-year – though we stress the journey is unlikely to be a straight line, with periodic volatility to be expected; indeed, that target might briefly be exceed near-term as derivative exposures are unwound (that means an ‘N’ shape trajectory rather than our previous view of a ‘V’). "
"Moreover, the overall end-2014 USD/CNY level fundamentally depends on which of the possible slowdown scenarios we see (though we stress again that we are increasingly certain it is a slowdown of some sort that we will see) – and that is ultimately a political, not an economic, choice."