A snippet from the latest ING note on their expectations for the onshore yuan.
Forecasts:
- end of 4Q19 high of 7.20
- 7.30 at end 4Q20.
- we don't rule out even higher rates as currency spikes are used as tools in the trade war
- effective trading range thus widens out to 7.05 to 7.50
- this does run some risk of re-igniting capital outflows. But China has sewn up its capital account pretty tightly in recent years, so that may be limited.
- enough two-way volatility can be generated that on a day to day basis, this is not a one-way bet
we think China is gearing up for no deal
