3 Jan 2014
Flash: China to expand FX market participation - BBH
FXstreet.com (London) - Brown Brothers Harriman analysts note that the Central bank deputy governor (and head of SAFE) Yi Gang penned an article yesterday saying that China will expand the opening-up of the foreign exchange market and increase participation.
Key Quotes
“He also noted that the nation will curb inflows and outflows of funds seeking short-term speculative and arbitrage gains, preventing the impact of cross-border capital flows. USD/CNY is making new lows for this move.”
“Also note that 12-month USD/CNY NDFs are down 0.22% on the day, a large move. The NDF now implies a 1.2% appreciation in 12-months, using the simple back-of-the-envelope calculation. We think further CNY appreciation is in the cards for 2014, albeit at a modest pace.”
Key Quotes
“He also noted that the nation will curb inflows and outflows of funds seeking short-term speculative and arbitrage gains, preventing the impact of cross-border capital flows. USD/CNY is making new lows for this move.”
“Also note that 12-month USD/CNY NDFs are down 0.22% on the day, a large move. The NDF now implies a 1.2% appreciation in 12-months, using the simple back-of-the-envelope calculation. We think further CNY appreciation is in the cards for 2014, albeit at a modest pace.”