USD/CNY Forecast to be Lowered – Commerzbank
Analyst, Zhou Hao at Commerzbank, suggests that on the Chinese policy
front, given the uncertain growth outlook, they still expect the PBoC to
cut the policy rates by 25bps in Q2, and broader easing policies will
be maintained in China over the remainder of the year.
Key Quotes
“In
addition, we think the PBoC will cut the reserve requirement ratio by
150bps before the end of this year, in order to counter capital
outflows. All these will lead to CNY depreciation, albeit to a lesser
extent than we originally forecast.
We now have a year-end
forecast of 6.75 in USD/CNY from 6.90 previously. This also implies that
significant USD appreciation is no longer likely to manifest, in line
with a slower pace of Fed rate hikes.”
