Khoon Goh, Senior FX Strategist at ANZ, suggests that this Sunday (on Chinese New Year’s Eve), China’s January FX reserves numbers will be released.
Key Quotes
“Markets had been surprised at the size of the decline in their December reserves numbers when they were released early last month, revealing the extent of depreciation pressure late last year (down USD107.9bn to USD3.33trn). We see another USD100bn decline in reserves over January as likely, given the efforts the authorities put in to stabilise the currency in the second half of the month.
Despite efforts by the Chinese authorities to maintain stability in the RMB, depreciation expectations continue to persist though recent USD weakness has helped ease some pressure.
The key near-term focus for markets will be this weekend’s release of China’s January FX reserves numbers, where a decline of around USD100bn is likely.
We still think the Chinese authorities will try to maintain stability in the currency following the Lunar New Year holiday. But while China still has ample reserves, the past year has shown how quickly this can run down.”
(Market News Provided by FXstreet)