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The aggressive moves higher in USD/RMB in recent weeks remained a focus for the market, according to analysts at Nomura.

Key Quotes

“While FX markets showed some stabilisation following comments from Chinese authorities, Asian equities have remained under pressure. Our Asia FX strategy team still believes that depreciation risks to the RMB remain and are increasing.”

“Indeed, a negative outcome for RMB would be if authorities’ actions against depreciation are limited; and the risks of an intensification of US/China trade protectionism materialise beyond what is already largely expected by the market (the market likely already expects US tariffs on USD34bn of China goods and reciprocal action from China on 6 July). This would likely result in the market quickly pushing USD/RMB towards 7.0 and possibly beyond.”