Yuan and the line in the sand at 7 (USD/CNY)

Author: Eamonn Sheridan | Category: News

Quick thoughts via Capital Economics on the Chinese currency

  • Say the devaluations we've been seeing is not a policy choice that will extend
  • PBOC allowing to slide but will want to limit that
  • point to the greater cost of short-term borrowing in the offshore market as indicative officials may be working to make shorting more difficult and hence contain the weakness
  • "We doubt that the 7 CNY per USD line in the sand will be breached while there is still hope of talks continuing" 
But … if the trade talks do break down, the PBOC may back off and allow it fall further

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