I posted earlier on JPM on the yuan:
BNP have a similar view on a lower RMB, saying it’ll keep falling:
- “Ultimately it depends on the yield difference between US and China, and we’re witnessing a nearly record widening of nominal rates differential.”
and
- “We don’t think there is a hard line-in-the-sand for the exchange rate.”
TD, too, are bearish:
- In an unexpected move, China’s 1-year LPR was cut less than expected by 10 bps to 3.45% and the 5-year rate was kept unchanged at 4.20%. Overall, the disappointment in the LPR decision adds more confusion for investors, especially after the meeting between PBoC and state banks which pledged for increased loan support. Despite a stronger-expected-fixing today (~880 pips), markets may read the LPR decision as a step back in policy support from authorities and may pressure USD/CNH back to YTD highs at 7.35.
Offshore yuan – the PBoC is holding the line so far this week.