CNY doesn’t need to weaken – Rabobank

Research Team at Rabobank, suggests that the biggest take away from Friday’s press conference from the PBoC was that China is looking at the “fundamental” argument that CNY doesn’t need to weaken based on its trade and current-account surpluses.

Key Quotes

“Yet it doesn’t seem to recognise that currencies’ values can move with changes in current account and the capital account. One can see appreciation with a current account deficit if capital inflows are even larger; and one can see depreciation if a current account surplus is exceeded by even larger capital outflows – as is the case at present. Perhaps that’s why the G-20, so long a champion of free markets, talked about “volatile capital flows”?”

Research Team at Rabobank, suggests that the biggest take away from Friday’s press conference from the PBoC was that China is looking at the “fundamental” argument that CNY doesn’t need to weaken based on its trade and current-account surpluses.

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