China: PBOC aiming to stabilize Yuan, Sees USDCNY at 6.40 by yearend – ING

By FXStreet FXStreet (Delhi) – Tim Condon, Chief Economist at ING, notes that the Chinese government looks to stabilize the Chinese Yuan after recent devaluation. We have revised our yearend USDCNY forecast to 6.40 from 6.55, the analyst adds.

Key Quotes

“At last week’s Summer Davos held in Dalian PM Li was asked about the likelihood of the RMB devaluation sparking a currency war. He said all the right things: “I wish to draw your attention to one fact: Since the formation of this government, the real effective exchange rate (REER) of the RMB has appreciated 15%.”

“The truth is, after the small adjustment, the RMB exchange rate is now basically stable…China is not a source of risks for the global economy; China is a driver of world economic growth.”

“One thing is certain: a continually devaluing RMB is not conducive to the RMB internationalization process. This is not our policy orientation. China wishes to join the SDR, not just for making the RMB more internationalized, but also for fulfilling China’s due international responsibilities as a big developing country.”

“We expect the PBOC to stabilize USDCNY at its current level with the aim of reducing the gap between the offshore USDCNH forward curve and the onshore …read more

Source:: FX Street