Holding the line – ING

There has been quite limited fall-out on the renminbi after Trump’s social media posts, ING’s FX analyst Chris Turner notes.

Chinese authorities are trying to keep USD/CNY below 7.20

“Currently, Chinese authorities are trying to hold the line by keeping the fixings of the onshore USD/CNY below 7.20. This limits how high USD/CNY can trade and also indirectly how high USD/CNH can trade too.”

“Chinese authorities are playing the long game here and will not be devaluing the renminbi for some short-term gains for local exporters. We think authorities are far more interested in preserving the renminbi’s status as an international reserve currency and in avoiding capital flight (albeit foreigners are already underweight in Chinese asset markets).”