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4 Feb 2015
PBoC may continue to intervene in USD/CNY – ANZ
FXStreet (Barcelona) - Analysts at ANZ comment on the recent 50bp RRR cut in China, and view that PBoC may refrain from depreciating CNY, and continue to intervene to cap the upside in USD/CNY.
Key Quotes
“The 50bp cut in the RRR is expected to inject RMB600bn (USD96bn) into the banking system. This will help replenish the yuan liquidity which the central bank has soaked up in the course of FX intervention.”
“With today’s move, our view is that the PBoC will be able to maintain their intervention effort without draining yuan liquidity and pushing up money market interest rates.”
“Based on our estimated liquidity injection from the RRR cut, the PBoC could potentially intervene by as much as USD96bn while keeping yuan liquidity steady.”
“We maintain our view that the authorities will not depreciate the currency, as that would risk even more capital outflows, which could prove to be destabilising.”
“We expect the PBoC to continue maintaining stable fixes and intervene to cap the upside in USD/CNY.”
“Today’s fixing, which was 51 pips lower despite USD/CNY being near the top of the band, is a strong signal of the PBoC’s resolve not to weaken their currency.”
Key Quotes
“The 50bp cut in the RRR is expected to inject RMB600bn (USD96bn) into the banking system. This will help replenish the yuan liquidity which the central bank has soaked up in the course of FX intervention.”
“With today’s move, our view is that the PBoC will be able to maintain their intervention effort without draining yuan liquidity and pushing up money market interest rates.”
“Based on our estimated liquidity injection from the RRR cut, the PBoC could potentially intervene by as much as USD96bn while keeping yuan liquidity steady.”
“We maintain our view that the authorities will not depreciate the currency, as that would risk even more capital outflows, which could prove to be destabilising.”
“We expect the PBoC to continue maintaining stable fixes and intervene to cap the upside in USD/CNY.”
“Today’s fixing, which was 51 pips lower despite USD/CNY being near the top of the band, is a strong signal of the PBoC’s resolve not to weaken their currency.”