Allan von Mehren, Chief Analyst at Danske bank, believes the pair could slip back to the 6.20 area within a year’s view.
Key Quotes
“We look for a moderate slowdown in China as the housing market is set to slow further and export growth also softens. We expect growth to decline to around 6 ½% from 6.9% in 2017″.
“We look for Chinese money market rates to ease further in 2018 following a big rise in 2017 as liquidity was tightened. M1 growth has fallen quite sharply due to the monetary policy and we expect PBoC to ease the foot a bit further from the break. PBoC has cut the Reserve Requirement Ratio to free up some liquidity recently. As US money market rates is set to rise, relative rates will move in favour of the USD”.
“We look for the main driver of USD/CNY to continue to be the overall USD development. We keep our forecast of a decline in USD/CNY to 6.20 in 12M”.