FXStreet (Delhi) – Prakash Sakpal, Economist at ING, suggest that the recent speech of Chinese Premier Li is likely to support the USDCNY and the bank has revised its year end forecast to 6.40 from 6.55 predicted earlier.
Key Quotes
“Speaking at the World Economic Forum meeting in Dalian, Premier Li said, “There is no basis for persistent depreciation of the renminbi”…”We will not want to stimulate exports through depreciation. China will not want to see any currency wars”.”
“For a third consecutive day today the PBOC fixed USDCNY below the previous session’s close. The spot USDCNY continued to depreciate today. We credit the strong fixings for narrowing the offshore USDCNH premium to spot (to 1.32% as of this writing from 1.79% on Monday).”
“We expect the PBOC to stabilize the USDCNY fixings in a narrow range for an extended period in hopes of reducing depreciation expectations as priced into the offshore market. We have revised our USDCNY forecast accordingly and now forecast it at 6.40 from end-September through mid-2016 (spot 6.38, Bloomberg consensus 6.50, onshore forward 6.50).”
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