CNY stable against its basket in recent weeks - AmpGFX
|Greg Gibbs, Director at Amplifying Global FX Capital, notes that the CNY has been weaker recently against the USD and its basket currency management approach has led its policymakers to allow the CNY to follow the decline in GBP, EUR, and JPY to some extent.
Key Quotes
“Weaker Chinese trade data and broader efforts to sustain economic growth have also led the Chinese authorities to pursue a moderately weaker exchange rate in the last two years. China has experienced capital outflow over this period that is related to the broader issue of rebalancing the economy and dealing with excessive credit growth.
Several other currencies in Asia tend to follow the CNY and were undermined by weaker Chinese trade data. KRW has additionally been undermined by troubles at Samsung and broader economic weakness.
Singapore operates a tightly controlled currency basket and its economic performance also been weak. As such, the SGD has weakened directly as a result of the weaker JPY, EUR, GBP, CNY and other Asian currencies in its basket. THB and PHP have been undermined by political uncertainty. IDR and INR, on the other hand, have been relatively strong, supported by improved political stability, and more promising economic policy.”
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