FXStreet (Bali) – According to ANZ, it looks like the bold move by the PBOC to depreciate the Yuan amid a slowing economy is the end of the fix as we know it, adding that for now, a higher USD/CNY will pressure USD/Asia up.
Key Quotes
“Looks like this is the end of the fix as we know it. PBoC says that it will decide the yuan midpoint based on market makers’ quotes together with closing quote starting today.”
“So the one off “devaluation” of the fix and allowing more market based determination takes us into a new currency regime. It remains to be seen how far the authorities will allow market forces to take this.”
“After holding onshore spot at 6.21 for so long, it is hard to see them just letting it go. What is clear is that a stable CNY had served as an anchor of some sorts for the rest of USD/Asia these past few months. This is no longer the case. A higher USD/CNY will pressure USD/Asia up.”
(Market News Provided by FXstreet)