24 Aug 2015
Chines yuan: could fall further to 6.80 by year-end 2015 - Barclays
FXStreet (Mumbai) - China’s currency could shed another 8% by the end of 2016, strategists at Barclays believe, and most likely will drag most of the world’s currencies down with it.
Key Quotes:
"So far USD/CNY has risen by 3%, hence, a further 7% move would put USD/CNY spot at around 6.80. Given this, we have revised our year-end 2015 forecast for USD/CNY to 6.80 from 6.35, and expect relative stability thereafter, albeit still with upside risks.”
“This view assumes that the Fed ignores the global turmoil and raises rates in September, in line with the expectation of our US economists."
"We estimate that a 10% REER depreciation would add only about 3.4% to exports growth and 20-40bp to GDP growth in the following year."
"Furthermore, if Fed policymakers are dissuaded from policy firming due to risks from China, it is even more likely that other major central banks’ policies will push back tightening or move toward outright easing."
Key Quotes:
"So far USD/CNY has risen by 3%, hence, a further 7% move would put USD/CNY spot at around 6.80. Given this, we have revised our year-end 2015 forecast for USD/CNY to 6.80 from 6.35, and expect relative stability thereafter, albeit still with upside risks.”
“This view assumes that the Fed ignores the global turmoil and raises rates in September, in line with the expectation of our US economists."
"We estimate that a 10% REER depreciation would add only about 3.4% to exports growth and 20-40bp to GDP growth in the following year."
"Furthermore, if Fed policymakers are dissuaded from policy firming due to risks from China, it is even more likely that other major central banks’ policies will push back tightening or move toward outright easing."