Asian FX at risk amid CNY depreciation

Asian FX is logically the most exposed to further CNY depreciation, while the performance since suggests there could be more pressure. On the other hand, the sell-off in European equities appears overdone. In order to assess the sensitivities of equities and FX to the CNY (and China), a multivariate regression of weekly asset price returns over the past five years was run by Barclays controlling for the market/growth (MSCI ACWI), the dollar, oil and CNYUSD.

"USDCNY is expected to rise to 6.80, which implies a further depreciation of CNY. Analysts discuss the implications for the global economy and asset pricesin Consequences of a new FX regime and outlined the risks to the China economy and growth", says Barclays in a research note.