3 Feb 2015
Speculation over potential CNY band widening – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, comments that a recent Bloomberg report could fuel speculation that renminbi could be allowed to weaken further over the coming months, with the report highlighting PBoC’s risk concerns over capital flows in China.
Key Quotes
“The weakness of the Australian dollar continues to be driven by the economic slowdown in China. The renminbi has continued to trade on a weaker footing as well at the start of this year with USD/CNY rising towards the top of its daily trading band reaching its highest level since May of last year.”
“The renminbi also weakened notably during the early part of last year. However, on this occasion so far the daily fix rates for USD/CNY have remained more stable suggesting yuan weakness is driven more by capital outflows.”
“A Bloomberg report has been released overnight in which it states that the PBoC views with concern the risk of volatile flows of capital into and out of China in the coming months, and is preparing steps to help address the danger according to people familiar with the matter. Two options under consideration are widening the renminbi’s daily band and guiding it lower by adjusting the daily fix.”
“The renminbi’s daily band was last widened to +/-2.0% in March of last year.”
“The report will reinforce speculation that the renminbi could be allowed to weaken further in the coming months.”
Key Quotes
“The weakness of the Australian dollar continues to be driven by the economic slowdown in China. The renminbi has continued to trade on a weaker footing as well at the start of this year with USD/CNY rising towards the top of its daily trading band reaching its highest level since May of last year.”
“The renminbi also weakened notably during the early part of last year. However, on this occasion so far the daily fix rates for USD/CNY have remained more stable suggesting yuan weakness is driven more by capital outflows.”
“A Bloomberg report has been released overnight in which it states that the PBoC views with concern the risk of volatile flows of capital into and out of China in the coming months, and is preparing steps to help address the danger according to people familiar with the matter. Two options under consideration are widening the renminbi’s daily band and guiding it lower by adjusting the daily fix.”
“The renminbi’s daily band was last widened to +/-2.0% in March of last year.”
“The report will reinforce speculation that the renminbi could be allowed to weaken further in the coming months.”