USD/CNY to nosedive towards the 6.20 level by year-end – NBF

The Chinese central bank has tried to curb CNY appreciation in recent weeks by raising reserve requirements for the foreign exchange deposits of Chinese commercial banks. Economists at the National Bank of Canada still see a year-end USD/CNY of 6.20.

Some PBoC officials tried to talk down the currency

“The Chinese central bank has tried to curb CNY appreciation in recent weeks by raising reserve requirements for the foreign exchange deposits of Chinese commercial banks. In addition, some PBoC officials have tried to talk down the currency, claiming it is overvalued.”

“Booming demand for Chinese exports is likely to be sustained over the coming months as US retailers seek to replenish depressed inventories. This demand, along with attractive real-interest-rate differentials, argues for further appreciation of the Chinese currency.” 

“We still see a year-end USD/CNY of 6.20, the rate prevailing before the depreciation engineered by the PBoC in August 2015.”