Iris Pang, economist at ING, points out that there was no mention of the exchange rate in China’s recently concluded annual Central Economic Work Conference.
Key Quotes
“The fact that the exchange rate was not mentioned even once can be seen as a signal from the government that it will allow the USD/CNY to cross the 7.0 handle in 2019. During the trade war, it is difficult to stop the yuan from depreciating and at the time of writing this note, USD/CNY spot was at 6.9064, which isn’t far away from 7.0.”
“Once the trade war truce ends after 90 days, then the yuan will depreciate further, and could easily pass 7.0. Our forecast is 7.30 by the end of 2019.”
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