17 Feb 2015
Expect PBoC to stabilize USD/CNY fix in the 6.11-6.16 range - ING
FXStreet (Barcelona) - Tim Condon of ING, expects PBoC to stabilize the USD/CNY fixing rate in the 6.11-6.16 range, and further gives the year end forecast for spot USD/CNY.
Key Quotes
“SAFE reported commercial banks sold a net CNY 71.4 billion ($11.7 billion) of foreign exchange to clients in January. The $11.7 billion USD equivalent exceeds December’s $11.4 billion despite the $10 billion widening in the trade surplus to $60 billion (first figure), which is consistent with increased hot money outflows.”
“We think the authorities at the People’s Bank stoked USDCNY appreciation expectations by allowing the spot USDCNY premium to swing from -0.5% at the end of October to 1.4% by end-December and to close to the 2% limit by end-January (second figure).”
“The 0.3% appreciation of the USDCNY fixing rate in January reinforced those expectations by rekindling memories of early 2013 when the PBoC appreciated the USDCNY fixing rate ahead of widening the trading band.”
“We expect the PBoC to stabilize the USDCNY fixing rate in the 6.11-6.16 range it’s been in since October, and DXY to drive the spot premium.”
“Our yearend spot USDCNY forecast is 6.190 (spot fixing 6.13, Bloomberg consensus 6.16, NDF 6.35).”
Key Quotes
“SAFE reported commercial banks sold a net CNY 71.4 billion ($11.7 billion) of foreign exchange to clients in January. The $11.7 billion USD equivalent exceeds December’s $11.4 billion despite the $10 billion widening in the trade surplus to $60 billion (first figure), which is consistent with increased hot money outflows.”
“We think the authorities at the People’s Bank stoked USDCNY appreciation expectations by allowing the spot USDCNY premium to swing from -0.5% at the end of October to 1.4% by end-December and to close to the 2% limit by end-January (second figure).”
“The 0.3% appreciation of the USDCNY fixing rate in January reinforced those expectations by rekindling memories of early 2013 when the PBoC appreciated the USDCNY fixing rate ahead of widening the trading band.”
“We expect the PBoC to stabilize the USDCNY fixing rate in the 6.11-6.16 range it’s been in since October, and DXY to drive the spot premium.”
“Our yearend spot USDCNY forecast is 6.190 (spot fixing 6.13, Bloomberg consensus 6.16, NDF 6.35).”