China: Has The Yuan’s Downtrend Ended? – RBS
|The Research Team at the Royal Bank of Scotland (RBS), in its latest note, expressed their views on the Chinese yuan.
Key Quotes:
“Capital outflows and currency weakness have become less mutually reinforcing”
“The yuan thus appears to be depreciating in a more orderly fashion and seems less of a risk trigger for sentiment on China”
“The currency is also being stabilized in the near term by firmer interventions by the authorities”
“But it’s too early to call an end to the yuan’s underlying downtrend’
“Both cyclical (diverging monetary cycles) and structural (demand for foreign assets) downward pressures remain intact”
“Nor has China’s systematic risk been mitigated, as the authorities’ imbalanced policy response so far compounds financial risks”
‘We thus warn against over-extrapolating the yuan’s stability for this quarter, as the yuan will continue a stop-and-go depreciation”
“We see another 8-10% adjustment (CFETS index 88, USD/CNY 7.20-7.30) justified by fundamentals and likely overshooting”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.