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- USD/CNY to break 7.00 over the coming weeks, ending the year around 7.10 – TDS
USD/CNY to break 7.00 over the coming weeks, ending the year around 7.10 – TDS
The Chinese yuan has fallen by around 2.7% vs. USD since 10 August and is primed for further depreciation in the weeks ahead. Economists at TD Securities forecast the USD/CNY pair at 7.10 by the end of the year.
Declining underlying support for CNY
“We now expect USD/CNY to break 7.00 over the coming weeks as pressure on the economy builds, ending the year around 7.10 (previously 6.80).”
“The growth outlook will undermine support for the currency. Weakening activity indicators and limited stimulus led us to downgrade our GDP forecast to 2.9% this year.”
“We think China's broad basic balance position will also weaken further in the months ahead, reducing the underlying support for the CNY.”
“Even if the USD turns lower we think China will limit the pace of any CNY appreciation, thus resulting in CNY depreciation on a trade-weighted basis.”
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