CNY to be fairly stable - ING

Iris Pang, economist at ING, points out that the Chinese yuan has been fairly stable against the dollar in 1Q, depreciating only 0.18%.

Key Quotes

“It has fluctuated in a narrow range of around 1.8%, following the ups and downs of the dollar index but not to the same extent. This narrow trading range could remain in place even after a trade deal has been reached. If there is disagreement on a possible deal, the central bank could demonstrate China's political independence by depreciating the yuan slightly.”

“In 2019, we think the USD/CNY will track the dollar index. Our forecast for the USD/CNY of 6.75 by the end of the year essentially tracks the development of trade talks. But we need to closely monitor the yuan's moves post-trade talks to determine if we need to revise up our yuan forecast in 2Q and 3Q. As of now, the quarterly forecasts on USD/CNY and USD/CNH are 6.85 for 2Q19 and 3Q19.”