Renminbi comes under renewed pressure on speculations

CNY comes under renewed pressure again from the arising speculations that China would go for CNY devaluation, after being steady with SDR inclusion; and also the US Fed hike anticipations and PBoC's expected rate cuts.

The relative monetary policy is in favor of higher USD/CNY, however, while there will be a moderate weakening of the CNY over next year, China is not expected to allow major devaluation.

"But PBoC will likely have to intervene quite significantly in coming months to show its hand once again and underline that it will not tolerate a big depreciation", says Danske Bank in a research note.

CNY devaluation will likely hurt the economy more than the benefits, as there will be sharp capital outflows and might be a bigger depreciation in other Asian currencies, which would destabilize both China and world economies.

Currently USD/CNY is trading at 6.4391.