USD/CNY: Downside room is limited - Westpac

USD/CNY has broken key levels, when authorities on both sides appear to be comfortable with the recent moves so far, according to Frances Cheung, Research Analyst at Westpac.

Key Quotes

“We continue to believe that the downside room is limited, as capital inflows versus outflows pressures are somewhat balanced. Meanwhile, current account surplus is not impressive being less than 2% of GDP.”

“The PBoC is managing CNY liquidity well. If policies on offshore lending is loosened, that will support CNH liquidity and keep CNH points stable. liquidity squeezes in the CNY and the CNH market around the Chinese New Year are likely to be avoided.”