- Friday USD/CNY close was 6.1470
- 7-day repo has opened at 3.20% (prior close was 3.53%)
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Some thoughts on the yuan from Morgan Stanley – they look for flows to continue to weigh on USD/CNH in coming weeks:
- Shanghai-Hong Kong Mutual Connect starting to gather attention and accounts selling USDCNH in preparation
- “This new measure will allow investors in mainland and HK to directly trade individual stocks on the other side of the border under a total amount limit (CNY 250-300bn each way)”
- “This will significantly increase the accessibility to foreign investors beyond the current schemes of QFII and RQFII and thus should lead to greater downward pressure on USD/CNH”
- The related FX conversion will take place in the CNH market
- CNY cash transferring across the border
