China: Rating downgrade by Moody’s suggest financial strength will erode in future – RBC CM
|Sue Trinh, Head of Asia FX Strategy at RBC Capital Markets, explains that Moody’s cut China’s long-term sovereign rating one notch, from Aa3 (neg) to A1 (stable) and the rating change reflects the expectation that China’s financial strength “will erode somewhat over the coming years.”
Key Quotes
“It is the first downgrade by Moody’s since 1989 and the first rating change since 2010. Needless to say, a ratings downgrade has been long overdue. Following the ratings action, Moody’s is now on par with Fitch (A+ rating), with S&P one notch above at AA-. CNH sold off sharply on the news, with USD/CNH spiking 80pips to 6.8900. However, the fact that the rating wasn’t cut by more given the deterioration in China’s debt metrics in the past decade saw CNH quickly recoup losses.”
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.