Stronger USD puts depreciation pressure on CNY

Depreciation pressure on the CNY has resumed as the USD strengthened. China will manage the CNY with a closer eye on trade weighted currency. Hence USD strength will generally lead to a weaker CNY versus USD. 

The CNH-CNY spread has pushed higher lately. This is normal when USD/CNY increases. However, we are close to levels where the PBoC has intervened to reduce the CNH-CNY spread. It is a requirement of the IMF with regard to SDR inclusion that CNH and CNY are close to the same level.