China: FX reserves will fall to USD3163bn – RBC CM

Research Team at RBC Capital Markets, notes that following yesterday’s weaker than expected CNY fix, today’s fix at 6.5618 was in line with expectations, but USD/CNH and USD/CNY remain bid.

Key Quotes

“We expect that FX reserves will fall to USD3163bn (cons: USD3200bn, from USD3219.7bn), materially lower than consensus. However, the fall will be largely due to valuation effects.

The US-China Strategic and Economic Dialogue took on a slightly different focus from previous meetings. Consistent with what we believe to be China’s policy priority at this juncture, the Dialogue focused on China’s financial liberalization, with China announcing today that it was offering US investors a CNY250bn quote to buy Chinese securities and that it was opening a Yuan clearing bank in the US.”