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17 Mar 2014
Flash: CNY potential for further appreciation ahead - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, expects the yuan to gather steam in the longer term.
Key Quotes
"Elsewhere, the Chinese authorities announced over the weekend that the daily yuan trading band has been doubled to +/-2.0% around the daily fix which is currently set at just above 6.13. We had been expecting the band widening announcement following the recent weakness of the yuan."
"The Chinese authorities have been intervening to weaken the yuan adding more two-way price risk ahead of the band widening in an attempt to dampen hot money inflows. The decision to widen the band also reduces the likelihood that recent yuan weakness was driven by a shift in policy by the Chinese authorities to pursue a weaker currency to support growth which has slowed more than expected early in 2014."
"We continue to expect the long-run yuan appreciation trend to remain in place supported by capital inflows into China. The Chinese authorities’ desire to rebalance the Chinese economy is also supported by a stronger yuan."
"It has also been reported over the weekend in the Chinese Securities Journal that monetary policy is more likely to ease in 2014 amid downward pressure upon growth. The annual rate of real GDP growth in Q1 may have slowed to below 7.5%."
Key Quotes
"Elsewhere, the Chinese authorities announced over the weekend that the daily yuan trading band has been doubled to +/-2.0% around the daily fix which is currently set at just above 6.13. We had been expecting the band widening announcement following the recent weakness of the yuan."
"The Chinese authorities have been intervening to weaken the yuan adding more two-way price risk ahead of the band widening in an attempt to dampen hot money inflows. The decision to widen the band also reduces the likelihood that recent yuan weakness was driven by a shift in policy by the Chinese authorities to pursue a weaker currency to support growth which has slowed more than expected early in 2014."
"We continue to expect the long-run yuan appreciation trend to remain in place supported by capital inflows into China. The Chinese authorities’ desire to rebalance the Chinese economy is also supported by a stronger yuan."
"It has also been reported over the weekend in the Chinese Securities Journal that monetary policy is more likely to ease in 2014 amid downward pressure upon growth. The annual rate of real GDP growth in Q1 may have slowed to below 7.5%."