|

USD/CNY: Depreciation is unavoidable amid the contrast between the Fed and the PBoC – BBVA

The recent sharp depreciation of the Chinese Renminbi (RMB) was in line with the expectations of the BBVA Research Team at the beginning of the year amid the unsynchronized monetary policy cycle between China and the US. They predict RMB to USD exchange rate at 6.6 at end-2022 with upside risks. 

Key Quotes: 

“Depreciation is unavoidable amid the contrast monetary policy measures between China and the US when we talk about RMB exchange rate trend till end-2022. We predict the RMB to USD exchange rate at end- 2022 to be 6.6 with some upside risk, while a macro analytical framework is more important to understand the underlying logic and make the forecasting. In addition, policy intentions of Chinese central banks on exchange rate need to be carefully considered and evaluated.”

“In the medium-to-long term, the PBoC is willing the RMB exchange rate to display some two-way fluctuation around its equilibrium level, and they will certainly intervene the FX market if the RMB exchange rate displays some one-way trending, either one-way appreciation or depreciation. That means, China’s monetary authorities are likely to stick to their pledge of keeping the CNY stable on a trade-weighted basis.”
 

Author

Matías Salord

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

More from Matías Salord
Share:

Editor's Picks

EUR/USD strengthens above 1.1800 ahead of German IFO data

EUR/USD gains ground for the second successive session, holding well above 1.1800 in the European session on Monday. The US Dollar remains heavy as a 'Sell America' theme returns to the fore amid uncertainty fuelled by US President Trump's latest tariff announcement. German IFO Survey could offer fresh trading impetus. 

GBP/USD rises toward 1.3550 as tariff confusion slams USD

GBP/USD extends the advance toward 1.3550 on Monday. The US Dollar faces intense selling pressure as tariff uncertainty lingers following US President Trump's latest announcement. Traders will take more cues from the broader market sentiment and central bank talks. 

Gold clings to gains near monthly peak amid flight to safety and weak USD

Gold sticks to its bullish bias near the monthly peak heading into the European session and looks to build on last week's breakout through the $5,100 mark amid a supportive fundamental backdrop. Renewed trade-war fears, along with rising geopolitical tensions in the Middle East, turn out to be key factors that underpin the safe-haven precious metal and validate the constructive outlook.

Cardano braces for impact as US tariff storm brews

Cardano is down 4% at press time on Monday, entering its third consecutive day of decline. Bearish bias in Cardano’s derivatives market positional buildup aligns with rising pressure on the broader cryptocurrencymarket amid US President Donald Trump's reassessment of global tariffs and domestic conflict with the US Supreme Court. 

Supreme Court nixes tariffs, Trump teases 15% global tariff

On February 20th, the Supreme Court ruled that Trump’s global tariffs under IEEPA authority were unconstitutional, effectively nullifying the framework. However, the relief was short-lived. Within hours, Trump floated a 15% blanket tariff under an alternative legal authority.

Top Crypto Losers: Zcash, Pump.fun, and LayerZero extended losses as Bitcoin loses $65,000

The cryptocurrency market starts the week in panic mode, with altcoins Zcash, Pump.fun, and LayerZero. Bitcoin falls below $65,000 as the US President Donald Trump regroups amid renewed trade policy risks.