HALISTER1: CNH Liquidity Tight, Depreciation Expectations Intensifies: DBS

CNH Liquidity Tight, Depreciation Expectations Intensifies: DBS

(Bloomberg) -- Tightening CNH liquidity is triggered by intensifying yuan depreciation expectations in medium-to-long term, DBS treasury and markets managing director Tommy Ong says.
  • NOTE: One-week CNH Hibor rate rises most in a month to 6.76103%
  • Uncertainty of GBP and EUR adds pressure to yuan; PBOC could intervene in offshore market upon black swan events; volatility of CNH Hibor could increase in the future
  • Offshore liquidity has been dropping for months as leveraged carry trades are leaving the market; expects no further sharp fall for CNH
  • Fed hike cycle likely gradual; see yuan at 6.72 vs USD by year-end
  • NOTE: Yuan deposit in Hong Kong has shrunk 23.3% this year as of end-Aug. to 652.9b yuan, according to HKMA
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Tommy Ong (DBS Group Holdings Ltd)

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