The US Fed’s underlying message on Wednesday was that normalization of interest rates in the country is expected to take a longer time than anticipated previously. Meanwhile, the Bank of Japan also kept an easing bias during its meeting on Thursday. China’s markets are likely to face the repercussions.

Firstly, the market might have to ease projections about the further decline of CNY against the US dollar. However, the core view continues to be the same that CNY is expected to weaken given weak economic fundamentals and capital outflows, said Commerzbank in a research report. China’s official CNY index, the CFETS index, has also declined by five percent year-to-date, signifying that the authorities in China also intend to steer a “managed depreciation” of CNY.

“We maintain our forecast that USD/CNY will reach 6.65 by the end of this year, implying moderate CNY weakness against USD over the next two quarters,” added Commerzbank.

Secondly, there might be larger risk on the downside to the Chinese currency against non-USD currencies such as the JPY, EUR and AUD. Excluding the HKD and USD from the official CNY index, the Chinese yuan has declined approximately 6.5 percent against other major currencies in 2016.

If the US dollar were to depreciate after the dovish statement by the Fed, other major currencies might strengthen greatly. Since the PBoC favors a stable USD/CNY, the Chinese currency might decline at a more rapid rate against non-USD currencies, according to Commerzbank.

Thirdly, many central banks are likely to set up new policy easing rounds, particularly in the emerging markets. PBoC might also join in. The US Fed’s statement explicitly expresses worries about the global economy. This signifies that China will have to undertake action ahead of the curve, except if local data comes out to be more solid than expected. The People’s Bank of China is likely to either cut the policy rate or the reserve requirement ratio in the coming quarter to stimulate growth, noted Commerzbank.