CNY expected to weaken further – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, sees CNY losing further ground in the next months.

Key Quotes

“USD/CNY has continued to rise, reaching 6.78 this week. However, in our view this continues to reflect a stronger USD rather than a weaker CNY – the trade-weighted CNY has been relatively stable in recent months”.

“We continue to look for CNY to weaken over the coming year. However, we expect it to be more broad-based CNY weakness due to fading growth momentum in 2017 and increasing financial risks from a sharp rise in corporate debt and growth in shadow financing”.

“With growth under pressure, China also needs a weaker currency to support the export sector. We look for USD/CNY to move to 7.1 in the next 12 months (current 6.77) and EUR/CNY to move to 8.38 in the same period (current 7.37)”.