HALISTER1: INSIDE CHINA: Yuan Rises After Stronger Than Expected Fixing

INSIDE CHINA: Yuan Rises After Stronger Than Expected Fixing

(Bloomberg) -- USD/CNY falls back below 6.700 after PBOC sets reference rate at 6.6971, just 0.01% weaker than yesterday.
  • Still is weakest CNY fixing since Oct. 28, 2010
  • CNY up 0.05% at 6.6987 per USD; fell as far as 6.7030 yesterday, weakest since Sept. 2010
  • Offshore yuan little changed
  • Model suggested fixing should have weakened 0.1% to above 6.7: ANZ
  • Yuan has demonstrated a clear trend of depreciation, but the downturn is very gradual and controlled to suppress aggressive speculation, says Ray Farris, head of Asia macro strategy at Credit Suisse
    • Fixing largely a policy decision
    • Forecasts USD/CNY at 6.8 in three months; capital outflow to continue, driven by declining domestic rate
  • If PBOC shows little intention to defend yuan at 6.7 vs USD, it could fall to 6.8 in weeks: Commerzbank
  • Yuan will continue depreciating this year, but at a slower pace, according to a Bloomberg survey of analysts and traders; median est. sees it falling another 1.4% to 6.795 by yr-end
  • China said to be setting up first immigration office to lure overseas talent
  • TPP to sink without China, Sri Lanka’s prime minister says
  • U.S. and China navy chiefs meet in Beijing
  • Govt to test allowing financial institutions to hold stakes in companies
  • PBOC injects 227b yuan liquidity via MLF operations
    • PBOC to auction 50b yuan of MOF deposits at banks
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Ray Farris (Credit Suisse Group AG)

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