CNY depreciation: The song remains the same - TDS
|Sacha Tihanyi, Senior Emerging Markets Strategist at TDS, notes that the post-election surge in US yields and the USD has hastened the pace of trend renminbi depreciation, and achieved TD’s long-standing 2016 end of year target of 6.88 earlier than expected.
Key Quotes
“While we estimate a spike in renminbi ‘beta’ to broad USD movements, as is typical during periods of USD strength, we see little deterioration in the renminbi-negative fundamental context, and also don’t believe that the policy maker stance towards the currency has changed.”
“Though we expect an eventual pause in the current pace of depreciatory pressure, in line with a stabilization in US yields and the USD, we expect trend depreciation to continue through 2017 as the fundamental context persists.”
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