CNY faces further depreciation – Danske Bank
|Chief Analyst at Danske Bank Allan von Mehren believes the Chinese currency could lose further ground in the next months.
Key Quotes
“We look for CNY to continue the gradual trend of weakening. China’s continues to face challenges with (a) rising financial risks, (b) overcapacity and (c) too much dependence on investments. This will keep downward pressure on medium-term growth. We also see a rising risk of a trade war with the US, which would hurt Chinese exports. Against EUR, we still expect CNY to depreciate by nearly 10% on a 12M horizon”.
“The CNH-CNY spread moved sharply into negative territory in early January as the CNH strengthened rapidly on the back of Chinese intervention in the offshore market, which led to a big capitulation of short CNH positions. However, the spread is now back around zero. We expect it to stay here but we can see periods of the spread moving in either direction”.
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.