CNY likely to depreciate further?

Announcement of CFETS Index allowed China to publish its own currency index and also reinforces that the authorities are less emphasizing on USD/CNY movements and more on changes in CNY relative to China's primary trading partners.

China is indeed attempting to maintain relative stability in the NEER by allowing USD/CNY to move high.

Chinese authorities' decision to prevent further weakness of CNY seems to have waned off late, with USD/CNY fixings moving higher consistently.

New CNY NEER basket allows the authorities to avert the currency appreciation at a time when broad USD appreciation is expected, which is in line with USD/CNY rise.

"Indeed, we believe some of the depreciation in CNY/CNH recently likely reflected a degree of targeted pre-emption of general USD strength ahead of expected Fed rate hikes", says Barclays. Add to Anti-Banner