FXStreet (Guatemala) – David Qu and Khoon Goh, analysts at ANZ explained that it is clear that the Chinese authorities are aiming to rein in depreciation pressure on CNY.
Key Quotes:
“This move is designed to dampen speculation via the forwards, and bring the onshore forward points lower.
Corporates’ hedging cost in the onshore market will rise and banks will impose limitations for the selling of FX forwards, according to their USD source.
We believe more clients will seek to hedge in the offshore market. There will be upward pressure on offshore forwards points, but we expect the authorities to take further action in capping the offshore USD/CNY forward/swap points.
Onshore demand for USD should increase, which should drive onshore CNY and USD rates higher. But we expect it to be limited, given adequate onshore USD liquidity.”
(Market News Provided by FXstreet)