According to Zhaopeng Xing, analyst at ANZ, USD/CNY breaching the psychological 7 level this week bodes well for China’s inflation outlook for H2 2019.
Key Quotes
“We estimated that the depreciation in the yuan has contributed 1.0ppt to the headline producer price index (PPI) in H1 2019.”
“A boost of similar magnitude to the PPI can be achieved if USD/CNY stays at 7.1 from now on.”
“This morning China released July inflation figure of CPI (2.8%) and PPI (-0.3%). In our view, the inflation outlook will still be subject to the exchange rate movement going forward.”
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