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.”