USD/CNY expected to edge higher – Danske Bank

By FXStreet Chief Analyst at Danske Bank Allan von Mehren sees the pair ticking slightly higher in the next months.

Key Quotes

“The PBoC managed to calm the markets faster than expected and the depreciation pressure on CNY versus the USD has eased”.

“We have thus lowered our forecast slightly but still see a 5% depreciation over the next 12 months to 6.85 (a bit weaker than the forward market)”.

“We still look for CNY to weaken, though, on divergence in monetary policy between the US and China”.

“The CNH-CNY spread has been eliminated again after the depreciation pressure eased. We expect the spread to stay around zero throughout the forecast horizon. Hence any basis risk in hedging CNY exposure through CNH is expected to be limited”.
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Source:: FX Street