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- Yuan under pressure for longer – Commerzbank
Yuan under pressure for longer – Commerzbank
The PBoC has started to become more concerned about Yuan’s weakness. However, CNY is set to remain under pressure, economists at Commerzbank report.
FX policy moves are unlikely to alter the Yuan’s weakening trend
PBoC may continue to tweak the daily fixing to manage expectations and ease one-sided depreciation pressure day-to-day, especially if the Yuan weakens abruptly. The central bank has other policy tools to stem the pressure on Yuan, such as cutting the reserve requirement ratio for foreign-currency deposits and increasing the cost for traders looking to short the Yuan. Nonetheless, FX policy moves are unlikely to alter the Yuan’s weakening trend.
We may need to see additional macro policy stimulus being rolled out and an improvement in economic fundamentals to halt or reverse CNY’s downside pressure.
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