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14 Aug 2015
Chinese Yuan firmer after initial havoc this week - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank explained that for the first time since November the CNY yesterday traded above the PBoC’s daily fixing.
Key Quotes:
"Following the sharp move lower in the previous couple of sessions, the more stable tone of the Chinese currency offered some reassurances to investors and policy makers across the globe. The better tone of the CNY followed a statement from the PBoC that there is no basis for the depreciation of the CNY to persist and that policy makers will step in to control large fluctuations.
While there sheer size of China’s foreign currency reserves gives credence to the statement that the authorities won’t stand by while the value of CNY plunges uncontrollably, weak economic data suggests that it is more difficult to swallow the PBoC’s reassurances that there is no basis for the depreciation of the CNY to persist.
Now that the Chinese authorities have allowed market forces to have greater sway over the value of the CNY, there is risk of further downside pressure on the CNY. Therefore, there is still every reason to suspect that a currency war of some description will remain in play in the region."
Key Quotes:
"Following the sharp move lower in the previous couple of sessions, the more stable tone of the Chinese currency offered some reassurances to investors and policy makers across the globe. The better tone of the CNY followed a statement from the PBoC that there is no basis for the depreciation of the CNY to persist and that policy makers will step in to control large fluctuations.
While there sheer size of China’s foreign currency reserves gives credence to the statement that the authorities won’t stand by while the value of CNY plunges uncontrollably, weak economic data suggests that it is more difficult to swallow the PBoC’s reassurances that there is no basis for the depreciation of the CNY to persist.
Now that the Chinese authorities have allowed market forces to have greater sway over the value of the CNY, there is risk of further downside pressure on the CNY. Therefore, there is still every reason to suspect that a currency war of some description will remain in play in the region."